BK and LLC Sale or Transfer

[confused72]

My wife and I are considering filing BK. We have over $150,000 in credit card debt.

I own a company which is an LLC. The company has been funded for several years by loans from my father and the company owes him far more than its worth. Can we transfer the company to his name, or have him take possession of the company but retain me on some minimal salary to run the business during the process of our personal filing for a chapter 7.

The company does have about 100,000 in inventory, but again owes, and its documented over 300K to my father. Would that transfer be heavily scrutinized. Would we be better served closing this LLC. as formally as possible, and simply starting a new LLC. entirely in my fathers name for the sake of continuing the business.

Many thanks in advance

[StartingOver08]

Do not transfer the business to your father before filing. This will create a large problem in your BK. Your LLC is an asset of yous and will become an asset of the BK estate. The inventory is an asset of the LLC and thus of the BK estate.

If you transfer the business for less than fair market value before filing it could be considered a fraudulent transfer to an insider. Look at this definition of fraudulent transfer acts: http://www.filing-bankruptcy-form.co...transfers.html This could hinder your BK or worse. http://www.moranlaw.net/nodischarge.htm

Does your business have value? It must, if you have $100k in inventory alone. The Trustee is going to want to liqidate the inventory/the business to generate cash for the creditors. Yes, even in a personal BK. Selling the business for fair market value prior to filing is one option.

Or, if you plan to keep the business post BK, then you will need to get with a BK attorney that is familiar with the complications that small businesses add to the BK filings. You will need to make a plan on how to keep the business. You may need to close the LLC. Do you have business debt that you have personally guaranteed? That debt will get listed in the BK too. Check this out: http://www.moranlaw.net/struggling.htm

[Stephen1234]

What kind of assets/inventory are we talking about? I am in the same situation. Attorney told me to sell off inventory as much as I can in the next few months and then file. Only problem is I can't prepay things like mortgage, etc., because then they're considered preferential payments, and any excess in the company bank account will go towards creditors. So it's a double-edged sword. Maybe your relative could work there in lieu of other employees you may have, put him on the payroll, and sell off assets to pay his salary. My attorney did say that the trustee will go into my business and sell every last thing they can find to pay off creditors. It was a shock at first, but I'm over it now. Time to start over.