Bk LLC, personal, or both?

Hello to all! New to the forum and seems like a lot of people have a lot of knowledge here.

My wife and I own an LLC in Arizona. The business has a total of $25K in unsecured credit cards which are backed by a personal guarantee and $40K loan that is secured. The secured creditor has liens on most of our other equipment. Total value of equipment secured creditor has liens for is $90k. We have around $20k worth of free and clear equipment. Little accounts receivables at this time.

We would like to file personal Bk 7 to wipe out our house, rv and unsecured credit cards totaling $335K. We have one suv and one truck personally that are current and we would like to keep with a combined payment of $1,096.

Questions:
If we file personal, will the court want to take the business and sale it to pay some of the personal creditors? Obviously, business creditors would be paid first leaving only $45k left.

If we sell all of the equipment and pay back the 40K secured loan leaving us with 70K cash, won't the court ask where that money is? We would like to use that to open a different business.

Will the courts force us to sale the two vehicles that we have? SUV KBB is 36K we owe 47K pmnt is 902 @ 0%. Truck KBB is 10k we owe 7K pmnt is 193. Current on both and would like to keep them. We know we won’t get a 0% or a new car for a long time after this.


Our first choice is to keep the business going and file only personal.

Any help would be greatly appreciated. Thanks so much!

is it a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship?????
pls let me know about this.....

Hi downrollings,
Thanks for the reply. I am unsure of what you are asking. We have the business setup as an LLC. Can you please explain a little more and I will get back to you right away. Thanks for trying to help!

Some of this will be state-specific. You'll want to discuss with a bankruptcy attorney to be sure.

However, I was in a very similar position and I'm sure the laws are similar. My attorney advised me that under Texas law, if the LLC has any assets (inventory, equipment, etc), the court will want to seize those assets in order to satisfy your debts. My attorney's advice was to close my store and sell all of the assets. I had a going-out-of-business sale and got rid of all of my inventory and most of my assets so that I could spend the money as I chose rather than letting the court choose - I paid off my back taxes and used that money for living expenses while I was looking for a new job.

I have a second business which has always been a side job for me when the store was slow. That business has no hard assets other than a laptop and printer, it's a service business based completely on knowledge and skills that I have. The computer hardware isn't worth enough for the court to worry with.

If your equipment is the only asset you have, you might be able to exempt it as "tools of trade." When you look at that, remember that you should value the equipment at what it would sell for (think ebay or pawn shop) rather than what you paid for it. Since you still owe on the other equipment I suspect it would be treated like a car, meaning its value for this purpose is the resale value less what you owe.

Your situation is complicated - you really need a competent attorney to work you through this.

@downrollings - yes, an LLC is a business entity that has some properties of a corporation and some of a sole proprietorship. You'll find lots of info in a Google search.