Shutting Down a Business: Minimizing Personal Liability and Steps to Take Outside of Bankruptcy

This CLE course will address the legal means of closing a business while minimizing personal risk. The expert panel will guide corporate counsel on the best approaches to personal guaranties and dealing with other creditors for businesses unable to reopen their doors. Companies must consider the employee-related claims which account for the vast majority of cases where creditors of a business assert claims against the owners for personal liability and determine any additional sources of recovery that are not obvious.

Shutting down a business is an art, not a science. There is a commonly held belief among many small business owners that they can close the doors and toss the proverbial keys to their creditors. But, that is not enough; lenders and other creditors have no obligation to "catch keys" thrown their way.

A structured plan is necessary for any business seeking to close its doors, whether due to its failure or the owner's desire. Foremost in planning for a winding down is ensuring that employees receive the wages, benefits, and vacation pay to which they are entitled--and meeting payroll tax obligations. Employee-related claims account for the vast majority of cases where creditors of a business assert claims against the owners for personal liability.

Additionally, businesses should identify all possible sources of recovery to fund the winding down of the company. Owners should explore insurance premium refunds (especially where headcount or out-of-date revenue information is the basis for premiums), security deposits, season-ticket licenses, and the licensing or sale of intellectual property.

Listen as our authoritative panel reviews the checklist and best practices for shutting down a business that is no longer sustainable and maximizing sources of recovery while minimizing personal liability of the owner(s).