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Now what do I do about the S-corp

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  • Now what do I do about the S-corp

    This may be long.

    To start I have a very good bankruptcy attorney. I will be filing a personal no asset bankruptcy in about three weeks. She does only personal bankruptcy.
    I have to file because I used my personal money to prop up the business ( 35 years..last three , I tanked).
    Mostly using credit cards and loans on my cash value life insurance.

    I realize that I don't need to do a business bankruptcy and the debts can't be discharged.
    I have the papers ready to send to the Sec. of State to dissolve the corp.
    I think I know what to do with the IRS, but I'm not sure what to actually file with them. I have paid my final quarterly tax payments and checked the box that said it was the last one.

    Now, down to my first and most pressing question.
    My business has no assets either. One of the biggest creditors is ME!
    However I have a line of credit with Bank of America opened in 1998.
    The balance on it is $31,000.00 The collateral is the assets.

    The only real assets I have if liquidated would be worth about $500.00 at most. But since in my state the shareholders are paid first ( that would be me) does Bank of America have any claim on the "junk" left over?
    Do I list it for them?

    And what do I do? Call them and tell them or write them and say in so many words, I have a LOC based on assets but I have none, so you are SOL. ( I wouldn't really say that) Maybe list the state law that says I know they have no recourse? Should I send them a copy of last balance sheet?

    Also, I have one cent left in my checking account. Do I close it.. It's with Bank of America too and they take out an ACH for the interest on the above LOC every month.

    Sorry... I know this is a lot. The personal BK looks like it will be no problem, but this thing is really worrying me. Oh and my layer wants to list the above LOC in the personal just to protect me even though it is not personally guaranteed.

  • #2
    Your lawyer is right. List every debt of the S corp in your personal BK, even if you think there is no personal liability/guarantee.

    In my personal Ch 7 my attorney even listed the S corp name in the "alias" section of the petition.

    Did you stop the ACH transfer to BOA from the business account? If the collateral is the assets of your corp and they are only worth $500 why not call BOA and surrender to collateral to them? I am assuming that the only two creditors you have are yourself and BOA for that LOC. I am also assuming that there are no assets other than the $500 liquidation value you stated. Please note, I am assuming also that the $500 is fair market value (FMV) for those same assets. Why not just negotiate with the bank for a relatively easy closing of the business LOC. Their only recourse is to go after you personally and you are taking care of that with your personal Ch 7.

    What did your attorney suggest?
    Last edited by StartingOver08; 06-13-2010, 03:17 PM.
    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


    • #3
      Originally posted by StartingOver08 View Post
      Your lawyer is right. List every debt of the S corp in your personal BK, even if you think there is no personal liability/guarantee.

      In my personal Ch 7 my attorney even listed the S corp name in the "alias" section of the petition.

      Did you stop the ACH transfer to BOA from the business account? If the collateral is the assets of your corp and they are only worth $500 why not call BOA and surrender to collateral to them? I am assuming that the only two creditors you have are yourself and BOA for that LOC. I am also assuming that there are no assets other than the $500 liquidation value you stated. Please note, I am assuming also that the $500 is fair market value (FMV) for those same assets. Why not just negotiate with the bank for a relatively easy closing of the business LOC. Their only recourse is to go after you personally and you are taking care of that with your personal Ch 7.

      What did your attorney suggest?
      She seems to think listing it in the personal BK will take care of it.
      The assets are just two old stereos and some plastic chairs and a 6 year old computer. The thing about the "assets" is by law you pay the shareholders first, so that would be me.
      Yes, first thing tomorrow I'll stop the ACH. It won't come out until July 1.
      I guess it's just the paperwork that I wonder about.

      Comment


      • #4
        I filed, similar reason and circumstances. The bank and trustee don't want your property or business property, just the cash if there is a lot of it. Do as your lawyer says - file your personal bk, dissolve the company, and it will be fine.
        Ch 7 filed 11/09 discharged 6/10

        Comment


        • #5
          I got my personal bankruptcy CH7 discharge paperwork in August 2010. In September 2010 I dissolved my S Corp. My attorney said that I could personally buy the computers and printers from the S Corp at what they would sell for and use the money to pay towards business creditors, along with what's left in business checking account. If the business has been dissolved and the business creditors were dismissed in the personal bankruptcy, is it necessary to purchase these items from business and then pay the money along with checking account balance to business creditors? Does anyone ever check to see if this was done? State, IRS, etc...? It just seems like a waste of money to me, especially if no one ever checks it.

          Comment


          • #6
            I am the only shareholder and the value of my computers, printers, etc...is $1000 and I have $600 in the business account.

            Comment


            • #7
              I actually shut down my business-through the attorney, I didn't dissolve it.

              Comment


              • #8
                I stand corrected, my business was dissolved by my attorney. For resume purposes, I'm wondering if I should use the date of business ceasing operations, or the date that I filed to dissolve the business? If I use date I filed to dissolve the business, it will look like I've been unemployed for less time. Please advise. Thank you.
                Last edited by carlsbadmike; 01-11-2011, 04:05 PM.

                Comment


                • #9
                  Hi Carlsbadmike,

                  Hiring managers will expect you to use the date that looks most favorable on your resume. There's nothing wrong with using the later date - after all, you were still dealing with components of your business at that time. And if you still happen to be dealing with pieces of the business being dissolved, then you could put "to present" on a resume. Just explain that you're in the process of closing it out and even though your doors aren't open anymore, there are still some business elements that need tending. The truth works in your favor!
                  OK - from now on it's not a "Bankruptcy." It's a "Weight Loss Program." I'm in. Sign me up.

                  Comment

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