United Western Bancorp Inc (fka UWBKQ)

[iPrelude]

Chapter 7 for Corporations and LLCs: Advantages
So why would a corporation or LLC file a Chapter 7 case?

Winding down a business in bankruptcy allows for a higher level of transparency. It’s easier to prove that the closure took place in the manner required by law, which, in some cases, might prevent a disgruntled creditor from pursuing litigation (but not always). Here’s why.

A Chapter 7 liquidation can help alleviate a common creditor concern—that an officer or member might be diverting funds into private coffers rather than paying creditors because a business Chapter 7 is set up to sell the company’s assets and pay its obligations in a very public manner.

When effective, the officers and managing members get to step away from the closure and leave the hard work of selling off assets and paying creditors to the bankruptcy trustee. But, it doesn’t always go as smoothly as a filer would like.

Chapter 7 for Corporations and LLCs: Disadvantages
When you file for Chapter 7, you lose control of the company. The bankruptcy trustee takes over the business assets and determines whether it’s in the best interests of the creditors to sell the business as a whole or to sell off the assets.

If you’re liable for any of the business debt, this might cause a problem. After the bankruptcy, the amount of debt remaining will often be greater than if you took on the responsibility of selling the assets yourself. There are a few reasons this could happen.

You might be able to get a better price for the business or assets (bankruptcy asset buyers are looking for—and expect—a deal).
The sales proceeds will be reduced by the percentage the trustee will receive as payment.
You won’t be able to negotiate and settle debt for an amount lower than what’s owed.
Any outstanding balance left after the trustee makes a payment will remain due and payable. As a result, you could be left with more liability than if you had negotiated with the creditors and sold the assets on your own.

Another disadvantage can prove to be even more expensive. Filing a case in bankruptcy court provides a disgruntled party—whether it be a creditor, business partner, or ex-spouse—with a forum to air any number of complaints about the handling of the business finances. And most disputes have the potential to shift debt liability from the business to an individual.

For instance, it doesn’t take much effort for a creditor to show up at the 341 meeting of creditors—the one hearing that all filers must attend—and provide the trustee with investigation-prompting information. When this happens, it’s common for a relatively short creditor’s meeting to be continued to allow for more thorough (and possibly uncomfortable) questioning.

It’s also fairly simple for a creditor to file an adversary proceeding—essentially a lawsuit—alleging any number of liability-shifting theories that would allow a creditor to collect from an individual’s personal assets. The possibility of opening the door to these types of litigation (discussed in more detail below) is often enough for most to avoid this chapter.

(For more information, see Adversary Proceedings in Bankruptcy.)

{ please see : https://www.nolo.com/legal-encyclopedia/chapter-7-bankruptcy-llcs-corporations.html }