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If the business is not a separate legal entity like a corporation, it is treated as an asset of the person filing bankruptcy and will probably end.

If the business is a separate legal entity, it may file for chapter 7, in which case it likely will be liquidated and should be formally terminated in the state it was incorporated in.

If it files for a chapter 11, it may be headed for liquidation, especially if it is a small corporation. Larger corporations may try to restructure its debt in different ways, from converting debt to shares to selling off assets for funds to become current on nondischargeable debts to ending union or other contracts and lower liability for employee retirement obligations. The business may then be discharged from the bankruptcy and continue operating as a meaner, leaner business, but the stockholders will have lost their entire investment and will no longer be stockholders of that company.

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11y ago
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15y ago

Usually a private company does not issue stock, or else it would be classified as a public company. In either case you would lose whatever value you had in the company.

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Q: What happens if a company goes bankrupt?
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