personal bankruptcy and business

[kaeyreed]

What is the name of your state? CA
My aunt owns a business here in CA. It is an LLC and there is another partner. Our question is, if she files personal bankruptcy will it affect her business as well? Thank you for any advice received.

GOOD LUCK FINDING AN ANSWER TO THIS QUESTION. I HAVE POSTED QUESTIONS ABOUT THIS ON SEVERAL FORUMS AND CAN'T SEEM TO GET MUCH OF A RESPONSE FROM ANYONE. I AM IN A SIMILIAR SITUATION. MY HUSBAND IS A BUSINESS OWNER AND A 50% SHAREHOLDER. THEY ARE ALSO INCORPORATED. FROM WHAT I UNDERSTAND, BECOMING INCORPORATED PROVIDES A SEPERATE ENTITY AND PROTECTS THE BUSINESS BUT I AM NOT POSITIVE OF THIS. I HAVE GOTTEN NO RESPONSES FROM ANY BK FILERS IN SIMILAR SITUATIONS. I HAVE POSTED PREVIOUSLY ON THIS FORUM REGARDING THIS SO YOU CAN SEARCH THE ARCHIVES TO READ THE RESPONSES.

YOU CAN READ SOME INFO AT THIS SITE BUT ITS KIND OF CONTRADICTING TO OTHER THINGS I'VE READ. THAT IS WHY I HAVE ASKED ON THESE FORUMS. I WAS HOPING TO GET A RESPONSE FROM SOMEONE WHO HAS FILED WHILE OWNING A CORPORATION.
[url]http://www.bankruptcycheck.com/Topic_business.htm[/url]

GOOD LUCK AND KEEP ME INFORMED!

SEE WHAT I MEAN. AS OF RIGHT NOW 39 PEOPLE HAVE READ THIS POST AND I AM THE ONLY ONE TO RESPOND!

[Ladynred]

CA exemptions say:

"Business or professional licenses

Inmates’ trust fund to $1000 (husband and wife may not double)

Property of business partnership"


A lot depends on the structure of the business. Your aunt's best bet is to get 2 or 3 free consultations with BK lawyers and find out just how her business would be affected.. if at all.

I found this paragraph at [url]http://www.bankruptcycheck.com/Topic_business.htm[/url]

If you file for personal bankruptcy and are an officer of an S corp in SC, you may be required to sell your shares at auction (if you go chapter 7) but you can bid on them yourself and get them back. Or, if the corp has little or no assets, you may not be required to do a thing since the shares you own are essentially worthless.

At least that's my interpretation....if you have found this to be untrue in your experience, please let me know as I am currently in the same situation.



Q. "What happens to my corporation if I file personal bankruptcy? "
A. "Since the corporation is a legal entity different and distinct from its shareholders, the bankruptcy of a shareholder does not affect the corporation. The bankrupt shareholder's shares in the corporation are an asset of his bankruptcy estate. The value of the shares in the hands of the bankruptcy estate is a function of the share's marketability, the percentage interest they represent of the corporation, and the net value of the corporation's assets."

Q. "What if I incorporate before I file?"
A. "Incorporating a proprietorship creates a legal entity separate from the debtor. Most trustees will not interfere in the business operations of a corporation that is owned by a debtor. If the corporation has value that is greater than any exemption claimed in the stock, the trustee may insist that the debtor either buy the stock back from the estate or that the corporation be dissolved and any value distributed to the bankruptcy estate.

In our opinion, incorporation of a sole proprietorship does not constitute a fraudulent transfer but merely a change in form of the asset held by the debtor: before incorporation, the debtor owned the business while after incorporation, the debtor owns the stock of the corporation that owns the business. Check the laws and judicial attitudes where you live."

[berault]

I am wondering if anyone has found out more nformation since this thread was posted. I own 49% of an LLC and do not want my partner to know if I file or to be forced to liquidate.
Any advice is welcomed.

[tyler_d]

I agree. Any more info on this would be appreciated

[bigun]

This forum does a nice job with routine bk questions.
When you get into LLC's and sub S {or any other business debt comingled with personal debt} you better get yourself to a lawyer. These questions are far from routine.

[tyler_d]

Originally Posted by bigun

This forum does a nice job with routine bk questions.
When you get into LLC's and sub S {or any other business debt comingled with personal debt} you better get yourself to a lawyer. These questions are far from routine.

Well, how about [URL="http://forum.freeadvice.com/showthread.php?t=320816"]this simple question[/URL] then?