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Do I keep my business going while filing?

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  • Do I keep my business going while filing?

    My husband owns a small business & is an LLC. We are doing a ch 7, incorporating all the business & personal debt. (all unsecured). We have no business assetts but have a lot of potential contracts that may go through later this year. He is a material supplier so we have only office equipment & that isnt worth much anymore. 3 year old computer, printer & fax machine. They are all worth next to nothing!
    I would hate to loose out on any potential work coming up later this year because we closed our company. Do we keep our business open under the name, do we close the business & rename? Can we keep our phones on under our business name?
    None of the work is definate but I hate to miss out on a chance to make money since we currently have very little income.

  • #2
    I owned two businesses, one a retail store and the other a consulting/development business. My lawyer's advice to me was:
    -Business assets worth anything significant will be taken by the court. Therefore, I closed the retail store and liquidated my inventory, fixtures, etc.
    -A business that is heavily dependent on YOU has no real value in the open market. My consulting business is a specialized niche market. Very few people have the skills and knowledge that I have in this area. It would be nearly impossible to sell my business. Therefore, the consulting business is still open. Like you, I have very few assets in that business - some 3+ year old computer equipment is most of it.

    The contracts could be a sticky point. Here's where you need a good lawyer who knows your area and the trustees you'll be dealing with. It's possible that they could want the money from those long-term contracts, but perhaps not, depending on your particular state laws and the trustees in your area. If you have any outstanding accounts receivable on the day you file then they WILL take that money. Make sure that all of your customers are paid up on their bills when you file, and hold off on billing them for more work if necessary.

    Comment


    • #3
      Thanks for your help.
      We dont have any accts receivable due to us. And we do not have any contracts, per say. We have bids on jobs that may or may not happen. Everyone is waiting for the economy to turn around before doing any business. So legally they are just bids we have at several different apt. complexes. (we are window suppliers). But nothing may happen this year & if something does happens we would like to keep the phones on just in case they do these bids in the future.
      So can we keep the phones on & keep the business open under the current name for possible future contracts?

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      • #4
        if you're doing a 7, you're closing the business
        I do not provide legal advice. All I do here is give my two cents as an opinion and at least share some of the facts that I know. Attorneys can provide legal advice, so go ask them or hire one.

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        • #5
          If you keep the business open under the current LLC name, that could be a problem for you in the future when the contracts eventually come through. It was explained to me by my attorney that the debt is discharged against me personally but the liability remains against the company. So for debt that is both company debt and personal debt, the creditor can come after the company by getting a judgment against the company and siezing funds in the company account. Even if you have no assets now in the company name, once you continue to do business in your LLC it will be a problem.

          So as CH33 Paralegal points out, you will want to have a new company name.

          Read this link for more info. http://www.moranlaw.net/struggling.htm
          Filed CH 7 9/30/2008
          Discharged Jan 5, 2009! Closed Jan 18, 2009

          I am not an attorney. None of my advice is legal advice in any way..

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          • #6
            Is all this the same for an incorporated business? My H had a meeting with atty. without me and now he barely remembers anything. Will file Ch. 7 so he will have to re-open an entirely new business?

            Comment


            • #7
              Yes, this is the same for an incorporated business. This is very crucial so you probably want to speak to the attorney again to get clarification for your specific business.
              Filed CH 7 9/30/2008
              Discharged Jan 5, 2009! Closed Jan 18, 2009

              I am not an attorney. None of my advice is legal advice in any way..

              Comment


              • #8
                My husband is a sole prop and there hasn't been an issue about closing our business. Of course, the economy may take care of that. The US Trustee did investigate our business because of the large drop in its income, but withdrew any objection the week before our 341. We are still open right now though, on day 35 in the 60 day club!
                Filed 6/10/2009
                341 7/30/2009
                Discharged 10/5/2009!!

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                • #9
                  Were there any assets or inventory in the hubby's business? Or just tools. I don't want to have to close my business it is a good lil business just can't keep up with the debt in this economy.

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                  • #10
                    No inventory, we are a broker. The equipment consists of computers, printers, misc, etc. Also no A/R, what's left is all bad debt.
                    I hear you about the economy. If we can all hang on until it gets better it will be great instead of having to close all these little businesses down.
                    Filed 6/10/2009
                    341 7/30/2009
                    Discharged 10/5/2009!!

                    Comment


                    • #11
                      Can't you just start a new company ABC Inc. and DBA as your old company XYZ?

                      Like say I had a business when I BK. And its called Acme, so I fold the business and start a new one called Foobar. Can't my new entity Foobar dba as Acme?

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                      • #12
                        Originally posted by signal View Post
                        Can't you just start a new company ABC Inc. and DBA as your old company XYZ?

                        Like say I had a business when I BK. And its called Acme, so I fold the business and start a new one called Foobar. Can't my new entity Foobar dba as Acme?
                        Yes. Large co's do this all the time when they BK
                        Filed CH 7 9/30/2008
                        Discharged Jan 5, 2009! Closed Jan 18, 2009

                        I am not an attorney. None of my advice is legal advice in any way..

                        Comment


                        • #13
                          You are most likely going to need to form a new corp. You need to get with an attorney to get good legal advice.

                          Don't delay on this.
                          All information contained in this post is for informational and amusement purposes only.
                          Bankruptcy is a process, not an event.......

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