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I have several questions about a bankruptcy involving 2 LLCs with 2 members declaring

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  • #16
    Originally posted by Mensa1 View Post
    I agreed that those WERE your main problems until you posted above about NOT being a shareholder. Uh-Oh, that means Ma and Pa are sole members of the LLC with the RE that is being transferred to them 1 week before filing?
    Thats my fault for not being clear. We are "shareholders", however we dont "own" the company in the sense that we are tied personally to the company, excluding my parents and their "personal guarantee" on the building loan.

    Yes we are shareholders and managing partners/members, but our OA prevents us from getting any assets in the form of money based on shares, unless though salaries or bonuses. So once they are no longer employed by the LLC, those options for share dividends will no longer be viable. You'll have to overlook my carelessness in my wording, im tired from moving items, and a few pulled muscles, and this is a rather confusing situation. In any case, I will still ask our lawyer about that.


    Originally posted by Mensa1 View Post
    \No way in the world that this transfer will be left to stand and have the parents claim 200K of homestead exemption... that one week before was owned by an entity that they controlled. I will never believe that one even is you show the property records 6 months after discharge, and title is still vested to the parents.
    I never said 200k (building loan is 200k and is to be filed on-building is worth 400K+land it sits on). the land is worth 20k-40k and it can be transferred now or at any time in the future Bk discharge permitting. I guess they could just wait and quick claim it after discharge? But our lawyer didnt see an issue with it. Under other circumstances... no, it would not be an option. But we are relying on our lawyer for this one. However if it would be the same either way and raise less flags, then I will ask about postponing the land transfer until after discharge. Im not sure if the property is currently titled to them already as members or if it in the LLC's name.... Im sure that has a great impact on the overall transfer... I'll find out.

    Also, I just learned today.... that our land, which the building in question is built on, was paid for in cash. Their is no loan on this, but it is in the name of the LLC that is filing. What effect will this have, if any?
    Last edited by jarrado; 03-08-2010, 10:08 PM.

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    • #17
      Originally posted by jarrado View Post
      Also, I just learned today.... that our land, which the building in question is built on, was paid for in cash. Their is no loan on this, but it is in the name of the LLC that is filing. What effect will this have, if any?
      Normal course of action is, you have a piece of property that you paid cash for at purchase. Then later build a bldg on it, using borrowed funds, you then place a mtg on the lands, and the bldg becomes part of the land. So the net effect is that the property now has a mtg on it, regardless of if was ever free and clear. No real difference that it was once free and clear, it isn't now.

      No real diff than is you paid off your mtg and now property is free and clear. You now take a new mtg on the property by borrower new funds, now you have a mtg on the property (again). Regardless of it once being paid off.

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      • #18
        As Mensa1 points out, once you borrow money and use the building as collateral, both the land and the building are encumbered.

        Is your asset protection attorney also your BK attorney?

        Is your Bk attorney an experienced BK attorney that knows the Trustee's well in your district?

        Is your BK attorney aware that you are considering a property transfer just before filing BK?

        I only ask these questions because it is highly unusual that a BK attorney would suggest a real estate transfer on a property with equity just before filing. This is a huge red flag, given that there is equity in the property your parents are seeking to transfer.

        The key thing here is that there is substantial equity in the property that the Trustee will be interested in pursuing for the benefit of creditors. The LLC's (each of them) are assets of your parents. The assets within each LLC would therefore belong to the BK estate. There is a real possibility that the Trustee will want to liquidate the asset to provide funds to pay off the creditors. After all, that is the Trustee's entire purpose in the BK: to find $$ to pay creditors.
        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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        • #19
          Originally posted by StartingOver08 View Post
          As Mensa1 points out, once you borrow money and use the building as collateral, both the land and the building are encumbered.
          I was thinking that this would be true, but better to be thorough than miss something.

          Originally posted by StartingOver08 View Post
          Is your asset protection attorney also your BK attorney?

          Is your Bk attorney an experienced BK attorney that knows the Trustee's well in your district?

          Is your BK attorney aware that you are considering a property transfer just before filing BK?
          At the moment we are trying to find another attorney that is both a asset protection attorney, bk attorney, has LLC experience and has been "around the block" so to speak.

          As far as the last two questions: Yes every attorney we have consulted with knows the trustees in our district... even I know his name, although I know him by reputation only.

          Next. Yes every attorney we have contacted said that, "due to our specific situation, while it would be a red flag, we should transfer the two lots behind our home and homestead them". Not to be confused with our business, as it is over 10 miles away and doesnt fall under homestead exemptions.

          Originally posted by StartingOver08 View Post
          I only ask these questions because it is highly unusual that a BK attorney would suggest a real estate transfer on a property with equity just before filing. This is a huge red flag, given that there is equity in the property your parents are seeking to transfer.

          The key thing here is that there is substantial equity in the property that the Trustee will be interested in pursuing for the benefit of creditors. The LLC's (each of them) are assets of your parents. The assets within each LLC would therefore belong to the BK estate. There is a real possibility that the Trustee will want to liquidate the asset to provide funds to pay off the creditors. After all, that is the Trustee's entire purpose in the BK: to find $$ to pay creditors.
          This really makes no sense to me, as I know a certain, a long time friend of the parents, attorney-along with every other attorney we have talked to, except one-who stated that "LLC 2 should be able to avoid problems and continue normal operation". Our bank in question happens to be one of his client.

          Now, I would like to know exactly what would make both LLCs my parents personal "assets", if you would?

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          • #20
            Do I Really need to bankrupt the LLC?

            95k in unsecured debt. (all personal debt)
            No Assets
            Had a business I shut down a year ago and walked away from the lease with a Personal guarantee.
            I do NOT have any business debt. The lease is written in my LLC name as well.
            I expect the Landlord will come after me at some point once he rents out the space.

            Question-I am already planning to file 7 for personal, do I need to file 7 for the business even though there's really no biz debt just the potential of the broken lease and personal guarantee?
            Should I just dissolve the business or would the Landlord try and sue the LLC?

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