consumer / business overlap

[brookbend]

MA

I defaulted on a warehouse lease I had personally guaranteed, and the landlord attached my house for the balance owed ($12,000). I thought this wasn't a bad solution - I have no plans to sell my house. I've now been called to a hearing DEC 30th to inquire on my ability to pay the balance, now.

It will be clear I have limited assets, that being inventory in (Ma where I live) RI, and Ca. I'd like to sell my inventory normally, as opposed to using it to pay off the debt now. I wonder on the following:

1) do my articles of incorporation (in Ma) protect the inventory?
2) should I lie about what I own for inventory?

With the chance I'll be ordered to show accounting logs, I could be charged with perjury. It will cost $2,000 to ship the inventory warehoused in Ca to Ma, so I imagine this fact is part of any strategy. Of course they could liquidate the inventory in Ca without shipping it anywhere. Or could they? My cost of the inventory (combined from all 3 current warehouse locations) was $15,000.

I know there's no black and white on all this, but I wonder what is likely to happen. I believe they're pursing payment now because my website still runs and they know I have not filed bankruptcy.

 

[JETX]

1) do my articles of incorporation (in Ma) protect the inventory?

Depends on many factors. Some:
- Whose name is on the records (receipts, payments made, order, etc.) for the inventory?
- Have you 'protected' the corporation by NOT co-mingling assets, funds, etc.?

2) should I lie about what I own for inventory?

Gee... what would you think the answer would be??

I guess there's a chance I'll be ordered to provide accounting logs, and someone might have authority to enter my home where they'd see my inventory - in any event I'd be charged with additional things if found out.

Hmm.... so which are you... thief, fraud or con man??

I know there's no black and white on all this, but I wonder what is likely to happen. I believe they're pursing payment now because my website still runs and they know I have not filed bankruptcy.

Actually there is a 'black and white' to this. Either you are criminal who hasn't been caught YET.... or you are a responsible mature adult member of society who realizes that he is accountable for his own conduct. You can't be both.

 

[brookbend]

reply

I respect your candor on the ethics. On the other issues, yes I think the corporation is separated, in all its aspects, from my personal life. Orders, paperwork, etc all indicate a business, not personal finance nor personal activities, and I'm planning to make my only 1-year outstanding "Inc" payment to the state, very soon.

Would there be any other details you can think of which might argue against "Protection" ..? Thanx.

 

[JETX]

Would there be any other details you can think of which might argue against "Protection" ..? Thanx.

Yes, there are LOTS of requirements that must be met by a corporation to protect the Directors/Officers from potential individual liability.

 

[brookbend]

reply 2

..and those requirements are probably to numerous to discuss here. I understand that. No problem and thanx again.