You Can Still File Bankruptcy
If you’re a general partner, you can file bankruptcy on behalf of the business which will immediately dissolve the partnership in the case of a Chapter 7 bankruptcy. This is what will happen if you file a business bankruptcy as a general partner:
Getting Bought Out
If your partner is against a bankruptcy because they want to remain in business, they can opt to buy out your partnership interest. For small businesses, this can usually be done very cheaply. But what this means is that if you made large cash or asset investments into the business as part of your partnership agreement, it isn’t likely that you will get that money. It may be wise to discuss a buyout of your partnership interest before you file bankruptcy.
Most creditors require a personal guarantee on loans and credit lines given to small businesses. This means that even if you file a business bankruptcy, you and/or your partner may still be personally liable for the debt that was incurred while in business. It’s best to discuss what will happen to this debt with your business partner before you file Chapter 7 bankruptcy. This is especially true if your partner plans to buy out your business interest.
Engage An Attorney
If you’re filing a business bankruptcy and your business partner is resistant, it’s best to engage a bankruptcy attorney early in the process. An experienced bankruptcy lawyer can help you understand what your options are and what pitfalls await you as you exit the business. Also, a bankruptcy attorney can advise you on how to dissolve your partnership in a way that does the least harm to your personal finances and the finances of your business partner.