Bankruptcy Question

[moo7se2]

I unfortunately am the not so proud owner of a medium sized fitness club that is unfortunately going to probably have to declare bankruptcy. The issue I am most upset about with myself is that I want to refund the money back to the members that pre-paid for the year. However, given the current financial situation this probably will not be possible. This is really bothering me because I do have high ethics and truly do want to refund the money but it is just not possible right now.

Any suggestions?

What is my legal responsibility to members who pre-paid for the year if I do declare bankruptcy? (i.e. Say someone pre-paid for a yearly membership but only had the chance to use the club for 2 months. Am I now legally obligated to refund the other 10 months, which I truly am going to try to do in some way, or does filing bankruptcy relieve me of this responsibility?

This is an S-Corporation.

Thanks for your help.

Moose

 

[anabanana]

Well, is this about your legal obligation or your ethical obligation?

Geez, did you not watch Enron? Legally, you can bend them all over. Ethically, if you wish to accommodate your members, you can reaffirm your obligation to them as individual creditors. Or you can list them right along with your vendors, lenders and anyone else and let them limp off with 20 cents on the dollar or whatever ends up in your plan.

Kinda touching that you're even thinking about trying to do right by them. It won't last, but it's nice to see that, as opposed to yet another debtor jumping lustily into the protections of the BK system.

 

[djohnson]

You'll get more answers if you list this under the bankruptcy section. However, I don't see any other creditors or the trustee letting you reaffirm all of these. If you file bankruptcy, they will get minimum back as unsecured.

 

[phwl]

Just raise all of your fees across the board to substantially increase your present income level and then divert these funds to the appropiate creditors. Once you alleviate them, you will have a fluid business.