Business Bankruptcy for Individuals
The primary purpose of many small business bankruptcies is to protect the individuals and their spouses who are operating the business.
If the business is operating through a corporation or through a partnership, often the most effective maneuver is first obtain bankruptcy protection for the individuals and then create a new business. The reason for this is that the individuals are most often liable for the debts of their corporation, and a bankruptcy for the corporation will not protect them.
If the business is operating without a corporation or partnership, the bankruptcy can still occur, but with this type of bankruptcy, it must be done in such a way to enable the individuals to recommence business shortly after filing.