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Close business and sell equipment before we file?

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  • Close business and sell equipment before we file?

    We are planning to close my business and file ch 7. I just got an offer to purchase all my equipment. Is this wise? If I sold everything for 30k and then spent the money and then filed like 6 months from now? Or is this a good way to get the BK dismissed?

  • #2
    Too many unanswered questions to give you an opinion.

    Is your business a corporation?

    What is your equipment really worth?

    Are you selling it to family/friends, or is this really a good business transaction?
    All information contained in this post is for informational and amusement purposes only.
    Bankruptcy is a process, not an event.......

    Comment


    • #3
      My business is an LLC.

      Legit business transaction, someone I barely know - one of my customers who wants to open her own salon on the other side of town.

      What my equipment is really worth is hard to say. 30k is probably a little too much if you ask me....

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      • #4
        Should not be a problem, since this will be an "arms-length" transaction. I would still give the transaction some time to age, and document, document, document everything that you spend that money on.

        Look around and you'll find plenty of suggestions on how to spend the money.
        All information contained in this post is for informational and amusement purposes only.
        Bankruptcy is a process, not an event.......

        Comment


        • #5
          I am finding myself in the EXACT same salon boat. Do you owe anyone for the equipment you are selling? I have a potential buyer, but there is a lien on the equipment. Trying to figure out if I should sell and pay the lender (I owe other lenders too), but I'm afraid thats a preferential payment and will get me a dismissal. Or just let the creditor pick it all up. Would like to hear what you decided to do with it?!

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          • #6
            The lender you are talking about has a security interest in the equipment? Is there enough to clear the lien? Paying the secured creditor is not preferential if you are liquidating the asset in which the lender has a security interest.

            You are more likely to get more for the equipment than the trustee is able to get in a BK sale of the equipment. There is nothing wrong with closing the business and selling the equip prior to filing, but like Frogger points out the documentation is critical.

            If the proceeds from the sale are greater than the lien, then you probably should pay the unsecureds equally....that is where the preference could potentially arise. See this link for more info http://www.moranlaw.net/failing-startup.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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            • #7
              Originally posted by justbeach03 View Post
              I am finding myself in the EXACT same salon boat. Do you owe anyone for the equipment you are selling? I have a potential buyer, but there is a lien on the equipment. Trying to figure out if I should sell and pay the lender (I owe other lenders too), but I'm afraid thats a preferential payment and will get me a dismissal. Or just let the creditor pick it all up. Would like to hear what you decided to do with it?!
              You pay off whoever holds the lien on the equipment. As to the rest of the money, you can find plenty of ways to spend it.

              Document, document, document.
              All information contained in this post is for informational and amusement purposes only.
              Bankruptcy is a process, not an event.......

              Comment


              • #8
                what if there are multiple lein holders with ucc's for all biz assets, but only one with the initial itemized items pruchased.?

                Comment


                • #9
                  Originally posted by justbeach03 View Post
                  what if there are multiple lein holders with ucc's for all biz assets, but only one with the initial itemized items pruchased.?
                  Time to get an attorney. Way too many pitfalls and ways to screw this up that could create huge problems for you. If you liquidate a business and do it improperly, the owner can be made liable for the debt and that debt could be classed as nondischargeable in bankruptcy if your actions rise to the level of fraud.

                  As for multiple liens holders, the priority is "first in time, first in line" The lien holder who has the oldest lien, gets their money first, and so on down the line. If there is not enough to pay the junior lien holders, so be it, they get nothing.

                  Comment


                  • #10
                    Searching myself

                    Hello everyone,

                    Newbie here and my first posting. I have read a lot through the forums in the last several days. I live in a subrub of Cincinnati, OH area and trying to find a really good attorney. I will be filing a personal chapter 7 and am having a rough time finding an attorney. I have done the Google search and looked in the phone book. But most the ads seem to be the bankruptcy cattle farm attorneys. I have several factors that make my situation somewhat complicated and not a straight forward chapter 7. So any help everyone could give me would really help.

                    Thanks in advance

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