Personal Loan but has our corporate guarantee.

I don't know what to do now. My husband and I were going to file ch 7 today personally but here is the new surprise from the attorney today!!! We have a personal loan on our office building with a corporate guar. My husband is sole shareholder. We were intending on surrendering the bldg but now we realize the bank can come after our working capital. We only get paid once a year. We will be BROKE and the business will not be able to operate. I don't have a job either. We can';t get unemployment. Any ideas? I feel like i am going to have anervous breakdown. we have to file the chapter before monday may 4th to stay a lawsuit reagarding another company we are involved in.

I am a little confused on your situation. Can you please clarify a little for us?
The following is what I gathered from your post, please make corrections were necessary.

You were going to file personal Ch 7 today but ran into a snag because you have a C-Corp that is the guarantor for a personal loan?

The C-Corp is a wholy owned asset of your husband.

You are planning to surrender the building. Is the building in the C-corp? Is the working capital in the C-Corp? What type of business do you have? (retail, service, etc)

You are involved in another company (please specify LLC. sole prop, partnership, another C-corp) that has been involved in a lawsuit so you need to file by 5/4/09.

I think if you can post enough detail we can all try to figure out something or contribute ideas for you to strategize with your attorney.

You were going to file personal Ch 7 today but ran into a snag because you have a C-Corp that is the guarantor for a personal loan? YES

The C-Corp is a wholy owned asset of your husband. YES

You are planning to surrender the building. Is the building in the C-corp? NO we own it personally

Is the working capital in the C-Corp? YES

What type of business do you have? (retail, service, etc) We run a computer software development company which is services a niche market.

You are involved in another company (please specify LLC. sole prop, partnership, another C-corp) that has been involved in a lawsuit so you need to file by 5/4/09. S-CORP

Thank you for trying to help

Since your husband owns the C-corp, the Trustee will probably consider the corp an asset of your husbands and the asset then belongs to the BK estate. I am not sure of this because I am not an attorney, but I had this happen with an S corp of mine.

Are you able to exempt the working capital in the C-Corp in your personal Ch 7?
Where are you located (which state)? Check your exemptions here: www.legalconsumer.com

Have you asked your attorney if the Trustee is going to want to sell the C-Corp and its 'intellectual property'? This may be a risk for you.

I found an article regarding intellectual property in bankruptcy and how to value it that may provide some insight into the Trustee's thinking:

http://www.ipfrontline.com/depts/article.asp?id=21436&deptid=3

This is the section of the code having to deal with Intellectual Property Rights:

http://bankruptcy.cooley.com/Section_365_n_(3).pdf

My concern for you is the C-Corp is a software development company and I don't really know if that makes it more attractive to the Trustee for disposition or less attractive!

the comany simply cannot survive without my husband and it has other debts which make it unattractive in addition to the corporate guarantee for the personal loan on our office. We are trying to protect about 150K which is impossib;le unders exemptions.

Your attorney should have told you this from the beginning. The Trustee is looking for assets to pay creditors. Cash is the Trustee's favorite asset. The only way to keep cash in a Ch 7 is to exempt it. The definition of a Ch7 is: The chapter of the Bankruptcy Code providing for "liquidation," ( i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors).

When you have a business, the Trustee can operate your business to obtain additional funds to pay your creditors.

The primary role of a chapter 7 trustee in an asset case is to liquidate the debtor's nonexempt assets in a manner that maximizes the return to the debtor's unsecured creditors. The trustee accomplishes this by selling the debtor's property if it is free and clear of liens (as long as the property is not exempt) or if it is worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property. The trustee may also attempt to recover money or property under the trustee's "avoiding powers." The trustee's avoiding powers include the power to: set aside preferential transfers made to creditors within 90 days before the petition; undo security interests and other prepetition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition; and pursue nonbankruptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law. In addition, if the debtor is a business, the bankruptcy court may authorize the trustee to operate the business for a limited period of time, if such operation will benefit creditors and enhance the liquidation of the estate. 11 U.S.C. § 721.

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter7.html


Your other options are Ch 13 or Ch 11 (business BK).

You probably need to speak to a different kind of attorney to protect the cash from both the lawsuit and the creditors.