Just Ask Jude

Yes. If enough is at stake, creditors can start an involuntary bankruptcy proceeding against a business. This doesn't happen too often but it does happen when creditors are concerned that a debtor is squandering or misappropriating assets that should otherwise go to pay debts that are owed to them.

To answer this question, you first have to determine what type of business you have. Is the business a corporation, a partnership, or a proprietorship?

Corporations, limited liability companies and partnerships are legal entities separate from their shareholders or partners. They can file Chapter 7 or Chapter 11 bankruptcy in their own right.

Proprietorships are just an extension of the owner: they can't file bankruptcy alone: the proprietor must file bankruptcy, since the assets and the liabilities of the business are really just one form of assets of the proprietor. The individual owner may file Chapter 7, Chapter 11 or Chapter 13 (if the debt limits are met).

This again, depends on what type of business you are filing bankruptcy on. If you are a sole proprietorship, then you file bankruptcy as an individual like stated above. An LLC, Corporation or partnership can file in their own right as stated above.