Chapter 7 and Business??

[HHM]

You really need to be careful with businesses. HHM: the Trustee can take control of the corporation and manage it in the best interests of the creditors. This is what happens in Chapter 11. The trustee can force your business into bankruptcy if that is what is in the best interest of the creditors. But again, it depends not only on the structure of the business but the owners. In many states, it's possible to have an actual corporation where there is a sole shareholder and a sole officer. In that situation, the fact that legally you have a "corporation" is not going to matter to the trustee. IMHO, you absolutely need a good lawyer if there are business interests involved. It's much more than just a matter of selling shares.

Umm, I hate to point out the obvious, we are NOT talking about chapter 11's. (that is a whole different ball game). We are talking about an "individual" filing BK who happens to have an interest in a corporation. Nor are we talking about "business bankruptcy". Assuming everything is on the up and up, the only recourse the trustee has is to take possession of the shares and sell them, but the trustee CANNOT become the shareholder and therefore exercise control of the company. And trustees really don't want to take control of the company. That is not to say the trustee does not have other means to get at the business assets, (fraudulent conveyance, court appointment, etc), but they do not typically exercise control of the company by become the legal shareholder.

[oldrocker]

I had asked a week or two ago if incorporating pre-bk would make things easier. It appears HHM was right in saying probably not as it appears it would just add "layers" that would have to be disected by the trutee/court. Oh well I have my first meeting with a lawyer next Thursday so I reckon I'll find out what hoops I'll have to jump through to get my business (sole proprietor) through this mess (if possible).