There are situations where a business needs to file bankruptcy, not to reorganize in a Chapter 11 case, but to liquidate in a Chapter 7 case. These types of bankruptcy are quite distinct from Chapter 7 personal bankruptcies. While a business may liquidate or wind down in a Chapter 7 bankruptcy case or reorganize in a Chapter 11 case, a business enterprise cannot represent itself. Basically, any entity that is not a natural person must be represented by an attorney when it files bankruptcy.
Pro se litigants, those who file without an attorney, are expected to follow the rules and procedures in federal courts and should be familiar with the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the local rules of the court, in this case, the District of Utah, in which the case is filed. A pro se bankruptcy debtor is solely responsible for everything related to the case.
Business debtors are artificial entities managed and operated by many individuals. Without an attorney, it would be necessary to appoint someone internally to manage the bankruptcy case, rather than just work in tandem with corporate counsel. This would be an enormous, daunting task. Requiring legal counsel to represent a corporation or LLC streamlines the bankruptcy process so that management does not have the primary responsibility of meeting the legal procedural and substantive requirements associated with the bankruptcy case.
According to District of Utah Local Rule 9011-2 (a), A corporation, partnership, limited liability company, trust, unincorporated association, or other party which is not an individual may not file a bankruptcy petition or otherwise appear without an attorney in any case or proceeding.
On its own initiative, or upon the motion of a party, the bankruptcy court may dismiss a case or proceeding, convert a case, appoint a trustee or examiner, grant judgment by default, strike any pleading or impose any other appropriate sanction for failure to comply with this mandate. Thus, there are many consequences for businesses that fail to observe this important requirement.
Of course, this requirement of retaining counsel adds to the expenses involved in filing bankruptcy as it generates and perpetuates attorney fees. If you must hire a lawyer to file for business bankruptcy, it makes sense to hire an attorney with the requisite expertise and experience. A seasoned bankruptcy attorney such as Theron Morrison can help anyone who owns and operates a business make an informed decision related to filing a business bankruptcy case.
Bankruptcy can also provide a necessary fresh start for businesses experiencing financial problems. Theron Morrison cares about protecting your business. Talk to the Morrison Law Group about Chapter 7 and Chapter 11 bankruptcy options for business enterprises. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas. Happy New Year from the Morrison Law Group!!!