Business Bankruptcy Attorney in Austin, Texas

Small businesses close or restructure for many reasons — lost contracts, pandemic-era debt, a partner departure, a lawsuit that drained reserves. Texas bankruptcy law provides specific tools for businesses in each of these situations: Chapter 7 for orderly liquidation, Subchapter V of Chapter 11 for eligible small business reorganizations, and full Chapter 11 for more complex restructurings. The right path depends on whether the business is viable and what the owner needs to protect.

Chapter 7 business bankruptcy is a liquidation process. The business files the petition, a trustee is appointed, and the trustee sells non-exempt assets to pay creditors in priority order. The business entity ceases to exist after the process. For sole proprietors, Chapter 7 can also discharge personal liability for business debts — the personal bankruptcy and the business wind-down happen in a single filing. For LLCs and corporations, the entity's bankruptcy does not automatically discharge any personal guarantees the owner signed.

Subchapter V of Chapter 11, added to the bankruptcy code in 2020 and a significant option for Austin small businesses, streamlines the reorganization process for businesses with debts below the eligibility threshold (periodically adjusted; currently approximately $7.5 million). Subchapter V is less expensive and faster than traditional Chapter 11 — it does not require creditor committee formation and allows the business owner to retain ownership even without creditor consent if the plan is confirmable. A bankruptcy attorney evaluates whether the business's debt load qualifies for Subchapter V before recommending it.

Personal liability is a central concern in any business bankruptcy. LLC members and corporate shareholders are generally shielded from business debts by the entity structure — but this shield erodes when personal guarantees exist on loans, leases, or credit accounts. Austin business owners who personally guaranteed their business's obligations face separate personal liability that survives the business bankruptcy. A bankruptcy attorney reviews every guarantee before advising on the owner's personal exposure.

Timing affects outcomes in business bankruptcy. Filing before a judgment is entered prevents the judgment from being docketed against real property. Filing before a key contract is rejected preserves the option to assume or reject it in the bankruptcy proceeding. Filing before the business account is levied protects operating funds needed to pay employees and keep the business running through reorganization. Business bankruptcy attorneys advise on timing as part of the initial assessment.

We connect Austin business owners facing financial distress with bankruptcy attorneys who understand both federal bankruptcy law and Texas business entity law. They evaluate the personal and business liability picture together, advise on which chapter fits the circumstances, and guide the process from the initial filing through discharge or plan confirmation.