Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

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Can I keep my business and still file chapter 7 ?

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  • Can I keep my business and still file chapter 7 ?

    I am filing chapter 7 and own 2 companies. Both companies are not currently running. However I am going to dissolve 1 of them ( it is an LLC )and start back with the other. My fear is this is going to mess up my personal Bk and that TT will make me close it down. The debt I have is some business but all personal guaranteed which will be included in my BK. The company Im keeping is a S-corp and has no debt.
    Chapter 7 - Filed 11/28/2010 <> 341 Meeting - Done 12/28/2010 <><> Report of No Distribution 12/28/2010 <><><> 60 Day Club <><><><>Discharged 3/1/2011<>>

  • #2
    On the day you file bk the Trustee becomes an owner of the stock in the corporation. The Trustee is not in the business of running a business. He is in the business of selling assets (the stock). He will investigate to see if the stock has any value. Value is based upon the liquidation of the assets of the corp and whether or not, once liquidated, there would be sufficient funds to pay all corporate debt and then some. If the debts of the corp exceed the assets of the corp the Trustee will most likely abandon the shares of the corp. Once abandoned, those shares are returned to you.

    You have to determine if there is any value to the shares. This would also include whether or not a competitor is willing to pay a few bucks for the shares which may control valuable advertising and good will of the corporate name.

    While the Trustee is investigating it is not a good idea to try to improve the value of the corp. If you increase the value of the corp you are necessarily increasing the value of your stock and run a greater risk that the Trustee will sell the stock out from under you.

    I trust you will not be filing your case pro se. You really need to sit down with an attorney who routinely handles individual Chapter 7 cases where the debtors have corps/LLCs as potential assets.


    • #3
      Thanks for the info. I have a great lawyer just don't want to be a pain in the butt asking 1 million questions. The LLC and S corp both have not been running for awhile now and there are no assets which these companies hold. The P+L's show zero and the bank accounts were closed last year. I will sit and wait till I file BK and then if I get them back I can go from there. Since these companies hold no assets nor debt my attorney said this is a simple chapter 7 with personal debt. I assume he is correct since there firm has done over 10k BK's but we will see. I will keep people posted to as what happens just in case anyone has a similar situation.
      Chapter 7 - Filed 11/28/2010 <> 341 Meeting - Done 12/28/2010 <><> Report of No Distribution 12/28/2010 <><><> 60 Day Club <><><><>Discharged 3/1/2011<>>


      • #4
        How does the TT value your company ? Past financials and assets I would assume. How long does he go back to value the company? If anyone has answers to these questions this would be of help to a lot of people.
        Chapter 7 - Filed 11/28/2010 <> 341 Meeting - Done 12/28/2010 <><> Report of No Distribution 12/28/2010 <><><> 60 Day Club <><><><>Discharged 3/1/2011<>>


        • #5
          Trustee is going to look at the here and now for value. Yes, he will ask for past tax returns but, unless there is someone out there willing to buy the stock, the stock will be abandoned.

          Practice pointer: Have your attorney ask the Trustee to abandon the asset early in the case. Find out up front what the Trustee wants to see so that the Trustee can make an informed decision in answering yes or no to the request to abandon. I have done this many times with much success so long as there truely was no value to the entity.


          • #6
            Thanks you have been a huge help !!!!
            Chapter 7 - Filed 11/28/2010 <> 341 Meeting - Done 12/28/2010 <><> Report of No Distribution 12/28/2010 <><><> 60 Day Club <><><><>Discharged 3/1/2011<>>


            • #7
              Did your attorney say you need to show the P&L's for the last 6 months from the time you file for the bk or the last 6 months that the business was in business and active?

              I am in similar situation. If you are required to show the P&L's for last 6 months the business was active do you show any monthly profits or do you show them in the red?


              • #8
                If the company has been quiet for so long, what would be wrong with just letting it die, get thru the BK and start a new LLC (versus S Corp) after the BK is done?

                Might be easier and quicker, plus if I had the chance to do an LLC over my two S Corps now, I'd definitely prefer the LLC


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