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Will alter-ego doctrine apply?

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  • Will alter-ego doctrine apply?

    Let me start by saying I have made some bad business decisions. I'm hoping this is not another one. Please provide any info you can.

    I had an S Corp (lets call it Widget Building Materials) for which I was the sole shareholder. I ran up a bunch of debt with several of my creditors. I also have a rather large unpaid Sales Tax bill with the state (which has since beend transfered from the business name and into my name). After one of my creditors raided my bank accounts, I filed for Ch. 11 protection which was ultimately dismissed (not discharged) in consideration of a few forebearance agreements.

    I am currently in default of all forebearance agreements.

    I have since started a new S Corp in which my wife is the sole shareholder. The name of the new business is Widget Hardscape and Masonry. We are engaged in the same business as the one before. We have some of the same customers, employees, the same web address, and the same phone number as the old business - but a different physical address.

    The two businesses overlap chronologically speaking.

    My wife and I have a pre-nuptial stating that all assets are "sole and seperate property".

    I'm wondering if I can get hit with the alter-ego doctrine? And if so, what sort of consequences could result?

    Any advice would be much appreciated...

    -P.

  • #2
    Originally posted by someoneinnv View Post

    I had an S Corp (lets call it Widget Building Materials) for which I was the sole shareholder.

    I have since started a new S Corp in which my wife is the sole shareholder.

    We are engaged in the same business as the one before.

    We have some of the same customers, employees, the same web address, and the same phone number as the old business - but a different physical address.

    The two businesses overlap chronologically speaking.

    My wife and I have a pre-nuptial stating that all assets are "sole and seperate property".

    I'm wondering if I can get hit with the alter-ego doctrine? And if so, what sort of consequences could result?
    Look at what you just wrote and ask yourself this question:

    Does this pass the smell test?

    It's walking like a duck, quacking like a duck, looking like a duck........
    All information contained in this post is for informational and amusement purposes only.
    Bankruptcy is a process, not an event.......

    Comment


    • #3
      You have answered your own question.

      Why not just file a personal chapter 7 and get rid of the debt?

      The creditors, most likely, already have recourse to you personally.

      There are two issues (1) the pure legal question of whether the company is alter ego, the answer sounds like most definitely yes, (2) will anyone actually pursue it. As to the 2nd question there needs to be some element of fraud involved. The mere act of creating a new company is not fraud. However, if you transfered all assets of Corp A to Corp B (equipment, customer list, A/R) and Corp B didn't BUY those assets for fair market value. Then you have fraudulent conveyance and the creditors can most definitely go after Corp B and the perpatrotors of the fraud, you and your wife.

      Comment


      • #4
        Originally posted by frogger View Post
        Look at what you just wrote and ask yourself this question:

        Does this pass the smell test?

        It's walking like a duck, quacking like a duck, looking like a duck........
        I would say; our guest is 'Duck soup'.

        Alter Ego Doctrine Definition
        Alter Ego Doctrine Definition-corporation used by an individual to conduct personal business. It’s illegal. In alter ego scenario, individuals will be held liable to the corporation. See also piercing the corporate veil.


        http://www.residual-rewards.com/alte...efinition.html

        'Hub
        If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

        Comment


        • #5
          Last item our OP mentioned. A pre nuptial agreement means nothing until you divorce. Has nothing to do with your problem and her income and assets would still be in jeopardy if filing together, and must be listed.


          EDIT: State Statutes prevail depending on what state you reside. A pre nup is like a Will, it has no use unless the occurrence happens. Any item purchase while married are equal in ownership. Same in bk, and the pre nup will not aid you in bk.
          Last edited by AngelinaCatHub; 02-11-2011, 10:04 AM. Reason: add on
          If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

          Comment


          • #6
            It looks like the original poster may have been in the remodeling business. The first business went south and he startd a new business. The first business has sales tax due and they have come after you. That issue has to be resolved.
            Golden Jubilee was a year-long celebration held every 50 years in which all bondmen were freed, mortgaged lands were restored to the original owners, and land was left fallow: Lev. 25:8-17

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