You may open a similar business after filing Chapter 7 bankruptcy. Generally, someone cannot keep someone from operating a business and otherwise making a living.
However, if you operate out of the same address at the same phone number, you may run the risk of creditors seeking further legal action against you.
In addition, the filer must be careful as not to run into a potential issue known as successor liability. Successor liability may occur where you place assets from company one into company two. When this happens, creditors may have a claim against company two.
Non-compete agreements
If you had a non-compete agreement with your previous business, make sure that opening a similar business will not violate the terms of that agreement. California generally disfavors non-compete agreements, but there are exceptions. You should consult with an attorney to understand how your specific non-compete agreement may be affected by California law.
Timing
There is no specific waiting period mandated by California law between the time your previous business’s bankruptcy is discharged and when you can start a new business. However, there may be practical considerations, such as rebuilding your credit, that may impact the timing of opening a new business.
Your personal credit score may be negatively affected by the bankruptcy filing, which can make it more difficult to obtain loans or credit to start your new business. It might take time to rebuild your credit, but there are options available to help you do so, such as secured credit cards and small loans.
To avoid this, the filer should purchase the assets from company one in some manner to avoid this issue.
About the Finkel Law Group
Finkel Law Group, with offices in San Francisco and Oakland, has more than 40 of experience assisting our clients navigate federal bankruptcy laws and state insolvency statutes. Our attorneys have the experience and expertise needed to help you and your management team successfully complete the liquidation or reorganization of your corporation, partnership or limited liability company.
When you need intelligent, insightful, conscientious and cost-effective legal counsel to assist you with the bankruptcy and reorganization issues confronting your company please contact us at (415) 252-9600, (510) 344-6601, or info@finkellawgroup.com to speak with one of our attorneys about your matter for a cost-free consultation.