S-Corp BK (c7)

[Acesdeep]

We have a small S-corp in CA, We have a total UN-secured dept of about 100k, we have 80k in personal guarantee line of credit, we owe Uncle Sam about 72k, Our AR have 190k sitting on the books. The "what-if" is all gone, did that for the last 3 months. We will get paid on this money but it's going to take a while since most of them revolve around the County run Municipalities and States budget. Let's be real the work outlook for this business is not there in the 6 to 8 months, I would like to be able to get our money but I can't hold off the creditors any longer. We have over 200k in equipment assets, in the last week we have just put a few items on the market and WOW I've seen FMV go from 80% to about 20%.

I also own 50% of a total separate C-corp that I invested in personally. This business is doing OK, yes OK as in barley making it along with everyone else. it can make it's own obligations but can not pay any of the shareholders.

We are meeting with an attorney on Thursday and just want to make sure i'm not wasting my time or money. I was advised by another attorney yesterday to do a chap11, since the business is owed money and would be able to stay in place while the money is received. That would be great if we had work in place and where still generating income to keep things rolling. I don't want to use the "what if" theory, it dosen't work believe me. IF I do a c7 bk will I be able to protect my investment in my other C-corp. As far as personal assets, I have no house, I have no cars, nothing of value. I put it all back into this thing. Any help would be great.

thanks,

[BigJohn]

It sounds like you have a terrible cash flow problem.

What is your credit score?

Have you checked to see what your business credit scores look like?

[StartingOver08]

You have to be careful. Both the S-Corp and the C-corp are your assets.

If you do a personal Ch 7 BK, then your assets are only protected to the extent you can exempt them. You need a very experienced BK attorney to best navagate these waters.

[Acesdeep]

thank you both for replying, You Both are correct in each aspect. I was able to get a meeting late afternoon with the attorney, an actual business transaction, business law, C-11 knowledgeable attorney who actually had answers to all of my questions. I had no idea of all these options, yes anyone can read a web site page on Ch-11, C-13 go to the us court site and read all about it. But assumption is the worst kind of knowledge, until you actually sit down with someone that understands the interior process and has a complete working knowledge of business transactions and C-11 process you absolutely know nothing. What a humbling experience, thank you both for taking the time to write a response. I will post a thread on the outcome as it unfolds, since this is going to be tricky I'll have my sec. write it so that we all can at least understand it. thanks again

[StartingOver08]

Thank you! Yes, we look forward to hearing the outcome of this very interesting case.

[Acesdeep]

5 months latter

So where still sitting in the same spot. we'll with a few eceptions, all the trucks have been turned back in, we move out of our shop and back to my home office again, sold most of the equipment to get us this far. It's been crazy funny and crazy sad! Except we have a light at the end of the tunnel. We are finally going to settel out with the Companies that owes the most money. Unfortunatly we are not in a postion to last another year with out this money. We have put in an offer and a meeting date next week. it was accepted and I am now trying to figure out what the best move is Personally. Once we recieve this money, On the (S-corp) I am sure the bank is going to want there piece of the pie immediatly. I have a few questions on this
1) If I deposit this money, then write the check to the attorney to get the paperwork started on the C11, can I pay myself back wages.
2) Or do I take the check to the attorney and start from there.
The c-11 attorney wants 6800 to get started and 6000 over the course of the bankruptcy for the S-corp. I'm not sure how long it will take to get a stay order issued?
My other pending issue is the C-corp has been in a lawsuit for the last 20 months, it has completly drained it and is coming up on the mandatory settlement hearing in late October. WHo knows how this is going to go, it could go great and it could go bad. My question is can I put everythign on hold until the Legal matter is settled. If the settlement hearing goes bad, then I will have to close the C-corp. It would go to a c7, with out a doupt. assets are extremly large and if the ecoonmy was good it would be awesome. Would it be better for me to ch-7 everything, S-corp, C-corp and Personally.
AR are about at the lowest in 6 years
AP is huge

any help would be great,

[Acesdeep]

Wow

OK, since asking questions is really out of the ballpark, how about I just tell everybody what is going on and then hopefully a small business owner like myself, in a far off place can learn from this Catastrophic Failure. I just ask of the Admin of this Site to have my status moved from newbie to GURU provided that I at least have a computer and some type of dial up connection when this is all over!

S-corp
In light of all the good news, we had originally planned on doing a CH-11, (put that plan in the trash) changing it to a CH-7 once the stay order is in affect hopefully that will buy us time to get to the MSH for the big lawsuit. Tax attorney is already started and is working to resolve our tax issues and will be getting in tune with the BK attorney once the ball is rolling.

[I](word to the wise, Lawsuits are liabilities that produce paper, cool cars, vacations, Plan rides and Cool office Decor for Someone else, Irregardless of weather you can win, don't let your pride stand in the way, even if everyone, including the attorney who's your Golfing buddy, is telling you that you can win! Remember this, if they Filed suit against you, they probably have more money than you and the man with the most wins, you more than likely will never see the inside of a Court Room pertaining to the suit) [/I]

C-corp
Once we get to the MSH (Mandatory Settlement Hearing)we have 2 options
Option 1
Try and sell the Secured Liability and pay off all the dept, and then just go out of business real quietly.
Option 2
after the MSH we file CH-7 and go away Quietly

Personally
File Ch-7 and go away Quietly

I will post a reply after each of the meetings and will fill in the blanks on the specifics as things start moving. I would encourage anyone that is contemplating a business BK to seek a experienced attorney, do as many interviews as you can, once you think you have one invest a little money. Show them a little piece of the puzzle and then see what they have to say, if it stinks then send them packing and find one that is working for your personal best interest in mind. Remember your Quality of Life is very important while dealing with this Crisis. Take time to get away from it and enjoy the things in life that make you Happy. And always remember, Failure is the Foundation for Success!

thanks for reading and God Bless!

[StartingOver08]

Excellent post Acesdeep

Your analysis of a lawsuit is, IMHO, dead on right. The only winners are the attorney's and you are footing the bill..

Sounds like you are coming to the end of your troubled times, almost. If you liquidate all the assets in the C corp and the S corp, will you still need to file Ch 7 for each of those entities? You might consider just filing the Ch 7 for yourself personally and closing the coporations since you have liquidated their assets.

AS to the tax debt, that needs to be paid anyway. Do you have a tax attorney working on an installment agreement for the past due taxes or are you paying them as you liquidate the corp assets?

Thank you for keeping us in the loop. I hope the mandatory settlement hearing works out to your favor.

[Acesdeep]

thanks

thank you for your reply StartingOver08, as I better understand the Complexity of this case I will be able to give you better responses to you questions. I guess it boils down to the bigger the monster the harder it is to kill it.