There are a variety of legal avenues available to protect your small business from creditors during difficult financial times. Depending on the jurisdiction, these may include filing for bankruptcy protection, restructuring debt through creditor negotiation or mediation, entering into an insolvency agreement with creditors, setting up trusts and other similar arrangements to limit liability exposure, forming limited partnerships and corporations that shield owners from personal responsibility for debts incurred by the business, or employing asset protection strategies such as transferring ownership of certain assets away from the company name.
In some jurisdictions it is also possible to take advantage of certain exemptions under state law which allow businesses to retain certain types of property even when they become liable for outstanding debts. Additionally, if you believe that one or more of your creditors initiated action against you in bad faith or violated contractual obligations then you may have grounds to pursue a lawsuit against them in order to obtain damages (e.g., compensatory damages) stemming from their wrongful conduct.
For further reference please contact a licensed attorney who is familiar with relevant state laws governing small businesses and can assist in determining which options would be best suited for your particular situation based on location and specific circumstances involved in the case at hand.
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