My son and Bankruptcy

[golden29]

What is the name of your state (only U.S. law)? Oregon

We need to file bankruptcy but before we do we want to leave our son with something to live on. So our question is this:
Can my son set up his own business that is seperate from ours and take over some of our landscaping accounts?
We would notify each customer that we can no longer take care of them and refer them to our son.
Will this cause any problems when we file bankruptcy later?
Thank you very much for your time in helping us.

 

[Antigone*]

What is the name of your state (only U.S. law)? Oregon

We need to file bankruptcy but before we do we want to leave our son with something to live on. So our question is this:
Can my son set up his own business that is seperate from ours and take over some of our landscaping accounts?
We would notify each customer that we can no longer take care of them and refer them to our son.
Will this cause any problems when we file bankruptcy later?
Thank you very much for your time in helping us.

Will these "account" also be creditors as part of the BK?

 

[golden29]

I amwill not sureto what exactly youhe mean butto no, the customers are not owed anything. My son would just be taking the customers over under his own business name and we would drop them.

 

[OHRoadwarrior]

So you want us to assist you in committing fraud before you file bankruptcy!!!

Sorry, we don't roll that way.

 

[Zigner]

So you want us to assist you in committing fraud before you file bankruptcy!!!

Sorry, we don't roll that way.

That's a bit strong there.

How is it committing fraud if the son starts his own business in which the parents have no involvement what-so-ever?



Ok, true, the OP's just looking for an end-around.

 

[OHRoadwarrior]

That's a bit strong there.

How is it committing fraud if the son starts his own business in which the parents have no involvement what-so-ever?



Ok, true, the OP's just looking for an end-around.

They do have an involvement, they want to intentionally redirecting paying customers, to cause their business to be unable to pay its bills, so they can file bankrupt. Here is an excerpt on fraud...

Concealment of assets is the most common type of bankruptcy fraud. This type of fraud occurs when the debtor hides his assets during the declaration phase of the bankruptcy process, in an attempt to keep them from being liquidated. Debtors may fail to include them on the list of assets, transfer ownership to family or friends and move assets into off-shore accounts.

 

[LdiJ]

They do have an involvement, they want to intentionally redirecting paying customers, to cause their business to be unable to pay its bills, so they can file bankrupt. Here is an excerpt on fraud...

I disagree...it appears that they need to file bankruptcy no matter what...and since I do a lot of tax returns for mom and pop landscaping services I have a pretty good handle on how they work.

Customers are not "assets" unless there are contracts for long term service, and even then they are only assets if the contracts can be sold for any reasonable amount of money or would cause the business to be able to be sold for a reasonable amount of money. It would be a reasonable assumption that their son works for them and that either the business will go under due to the bankruptcy or will no longer be able to employ their son.

Any potential buyer with any sense at all would not agree to buy a landscaping company that was on the verge of bankruptcy, they would only agree to buy the assets of the company and they would only pay what they were truly worth. Landscaping companies do not have much in the way of bricks and mortar assets, and contracts would be worth only a tiny fraction of their value as the buyers would still need to make a profit on fullfilling the contracts, or profits on whatever customers they can retain if there are no contracts. Mom and pop landscaping companies wouldn't own big equipment, they would lease it as needed.

Contracts for landscaping services are rarely for more than one season, and no sensible customer of a landscaping service would automatically agree to renew with someone who purchased the business from a bankruptcy trustee...they would shop around.

It also is not likely that they could continue to pay their bills if they kept all of their customers, or they wouldn't need to file bankrupcy.

If they told their customers that they were going out of business but recommended that they employ their son for the customers he currently handles is hardly fraud.

For all these reasons there would be little opportunity here for fraud. Now, if they were telling all their customers to employ their son's new business, and the had any significant bricks and mortar assets and transferred those to their son at significantly less than fair market value, and retained "control" of the business their son owned, THAT would be fraud.

But for the son to strike out on his own, even with the blessing of his parents, would not be fraud.

 

[latigo]

So you want us to assist you in committing fraud before you file bankruptcy!!!

Sorry, we don't roll that way.

"Debtor's prisons", "bankruptcy fraud" for turning over a failed, non-asset landscaping business, plus customer lists to an off spring????

You know the sky is not actually falling, Mr."Chicken Little"! It’s just that your unschooled haranguing is causing some of your ceiling's plaster to loosen!

And enough of this "plural pronoun business" and your juvenile twirling of the orbs!

In the future please utter your Ouija board sophistry for thy self only. Because you have few if any disciples.

_________________________________

[SUB](I would like to ask if there is a Wal-Mart logo on your law doctorate, but I frequently get booted for such unkindly inquiries, so I'll politely refrain.)[/SUB]

 

[OHRoadwarrior]

"Debtor's prisons", "bankruptcy fraud" for turning over a failed, non-asset landscaping business, plus customer lists to an off spring????

You know the sky is not actually falling, Mr."Chicken Little"! It’s just that your unschooled haranguing is causing some of your ceiling's plaster to loosen!

And enough of this "plural pronoun business" and your juvenile twirling of the orbs!

In the future please utter your Ouija board sophistry for thy self only. Because you have few if any disciples.

_________________________________

[SUB](I would like to ask if there is a Wal-Mart logo on your law doctorate, but I frequently get booted for such unkindly inquiries, so I'll politely refrain.)[/SUB]

What rock did you crawl out from under? Go play with your keyboard on another web site, this is where the adults hang out.

The difference is if OP successfully moves the profitable accounts to their son, they will file chapter 7 and walk away from their debts laughing. If they don't, they file Ch 11 and pay their bills. That is fraud.

 

[latigo]

What rock did you crawl out from under? Go play with your keyboard on another web site, this is where the adults hang out.

The difference is if OP successfully moves the profitable accounts to their son, they will file chapter 7 and walk away from their debts laughing. If they don't, they file Ch 11 and pay their bills. That is fraud.

How childishly crude, inarticulate and ill informed - a real "word smith" in our midst!

But then I’ve always been fascinated with the lack of breeding.

Fini!

[SUP](When knowledgeable I will attempt to dispute misleading "legal" guesswork, but it would cowardly of me to engage in combat with an unarmed opponent.)[/SUP]

 

[LdiJ]

What rock did you crawl out from under? Go play with your keyboard on another web site, this is where the adults hang out.

The difference is if OP successfully moves the profitable accounts to their son, they will file chapter 7 and walk away from their debts laughing. If they don't, they file Ch 11 and pay their bills. That is fraud.

Do you have any idea how little logic there is in what you have posted?

 

[OHRoadwarrior]

Do you have any idea how little logic there is in what you have posted?

I suggest you take your misinformed self and read the Uniform Fraudulent Transfer Act and research the term fraudulent conveyance. Customers are equivalent to assets. When you actively attempt to convey the revenue they provide to another party, to avoid the benefit of their existence/utilization, in an attempt to defraud creditors from collecting money due them, they are liable.

We would notify each customer that we can no longer take care of them and refer them to our son.

The action of actively attempting to make business decisions by transfer of good accounts to another company, is contrary to the goal of the company survival and ability to function. As the son is not paying them a fair market money amount, for the conveyance of profitable customers, to reimburse them for lost revenues, it is clear they are attempting to commit fraud, to the detriment of their creditors.

 

[LdiJ]

I suggest you take your misinformed self and read the Uniform Fraudulent Transfer Act and research the term fraudulent conveyance. Customers are equivalent to assets. When you actively attempt to convey the revenue they provide to another party, to avoid the benefit of their existence/utilization, in an attempt to defraud creditors from collecting money due them, they are liable. The action of actively attempting to make business decisions by transfer of good accounts to another company, is contrary to the goal of the company survival and ability to function. As the son is not paying them a fair market money amount, for the conveyance of profitable customers, to reimburse them for lost revenues, it is clear they are attempting to commit fraud, to the detriment of their creditors.

Well, obviously you didn't read what I previously posted.

You are making an assumption that somehow this business could survive, with its existing customers, by filing a chapter 11. You are completely ignoring the fact that when it gets down to bankruptcy for a mom and pop shop, that its basically a done deal. You are also making the assumption that existing customers are an actual asset of the business, when that is really very unlikely...in more ways than one.

Your assessment of the situation could be accurate in some instances...particularly if there are significant bricks and mortar assets that are transferred at well below market value. However, when its a mom and pop landscaping business, you are completely off the wall.

 

[OHRoadwarrior]

Wrong again LDiJ. It does not matter if the business goes under or not. Every penny willfully diverted prior to that point is fraudulent. If the business were to shut down, then after closing for good, did the same thing, they could still be found guilty of it. Why? Because good paying customer lists are an asset and thus have an economic value. The law does not require they sell off the list, however, giving away an asset, to a close party who will profit from it, can bring charges. They could potentially have a customer list auction, advising all local competition of the auction, then sell it to the highest bidder, thus protecting creditor assets.

 

[LdiJ]

Wrong again LDiJ. It does not matter if the business goes under or not. Every penny willfully diverted prior to that point is fraudulent. If the business were to shut down, then after closing for good, did the same thing, they could still be found guilty of it. Why? Because good paying customer lists are an asset and thus have an economic value. The law does not require they sell off the list, however, giving away an asset, to a close party who will profit from it, can bring charges. They could potentially have a customer list auction, advising all local competition of the auction, then sell it to the highest bidder, thus protecting creditor assets.

You are absolutely nuts. The only possible way that you could be remotely accurate is if there are actual contracts that the customers would be required to honor if sold or auctioned to someone else...and likely required to honor for more than one season. You are completely ignoring the nature of this business.