The answer is always “No!”
When a corporation files a chapter 7 petition, the Bankruptcy Trustee will always investigate whether the business owner paid personal expenses from the business, transferred business assets to himself or others, and whether all business income was properly reported. The result of such inquiries is always a lawsuit by the corporation’s bankruptcy Trustee against the business owner and his/her family.
The better approach is to use non-bankruptcy procedures to wind down the company and to consider a personal bankruptcy for the business owner to discharge his personal guarantees or his personal liability for business credit cards (there is no such thing as a “corporate” card: the cardholder is always personally liable as well as the business.
This week a business owner from Queens came to my office, referred by his business attorney. This is precisely the issue we discussed. Our conclusion: he will try to find a buyer for whatever price he can get in a short period of time. We will sell the assets of the business, pay the tax liabilities for which he is personally liable (payroll and sales tax); pay the secured secured creditor the balance of the sale price; and then sell the lease (not covered by the secured creditor) to pay unsecured creditors and wind-down expenses.
In this situation a personal chapter 7 is not an option because the owners of the business (Husband and Wife) do not qualify for chapter 7. The solution, if needed, will be to file a joint personal chapter 13 to pay the balance of personal liability debt over 5 years with no interest, or perhaps a lesser amount if they don’t have much equity in their home.
Give us a call to let us develop a personalized strategy to get on with your life!
Paul Hollender. Staten Island’s only Board-Certified Bankruptcy Lawyer. Selected for Super Lawyers for 15 years. Specializing in Bankruptcy for 48 years. Here to help you.
Corash & Hollender P.C. 1200 South Avenue, Staten Island NY. 10314
(718) 442-4424 [email protected]