Thank you for your question. I am happy to assist you.
You may have a problem if the person files a bankruptcy for his business. The trustee may try to avoid the transfers to your LLC under Section 547 or 548 of the Bankruptcy Code.
Let me explain.
A transfer of the debtor’s assets to a creditor that results in a creditor receiving more than the creditor would have in a Chapter 7 bankruptcy, is typically considered a “ 547 preference". Bankruptcy Code §547 provides for the avoidance of preferential transfers within 90 days before the bankruptcy filing date for third parties. Transfers to insiders (including a relative) are subject to a longer avoidance reach back of one year.
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