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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 15590
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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Im trying to reach wallst ESQ

Resolved Question:

I'm trying to reach wallst ESQ
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 3 years ago.

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

Customer:

I am a little confused of whos who on here and asked many questions but you should know the situation pretty well and you helped a lot.

Customer:

I'm hoping to file as soon as possible and have everything ready. Here is my situation, let me know if you have any insight:

WALLSTREETESQ :

ok

Customer:

My corp has a 50,000 judgment against it and the inventory and cash in the company is valued less than the judgment amount so it has no value. I'm considering raising the prices to slow the sales to be sure the inventory doesn't deplete too much and converto to cash and end up being more in value than the judement amount......this shouldn't be an issue and still should be less than the $50,000 but something to consider. The main thing I need to figure out is this:

WALLSTREETESQ :

yes

Customer:

I had a debters exam to show the assets and everything for the corp 2 weeks ago. I went with an attorney and the other attorney was super busy and had 5 people all at once. (the attorney suing the corp subcontracted out to this guy for $75, thats what my attorney with me said). The guy was so busy that he just gave my attorney and myself a questionnaire and we filled it out to the best of our ability but didn't have a few minor things regarding the corp so we continued the exam for 2 1/2 months later. I should have wound down this corp well over a year ago when the guy who incorporated us screwed us and stole from the company and we found he filed nothing at all for the corp other than open it and help get a bank account. Anyway, now, with this judement against the corp by a shipping company we had to get the ball rolling quickly. We just finished having an accountant do quickbooks for the last 2 years and file everything that wasn't filed and also file our personal taxes that were behind as well. We paid everything owed personal and corporate but the corp we found out about a month ago was suspended. That too we paid up what was needed but it will be months before it gets processed....okay so thats the situation but here is what I need to figure out:

Customer:

I have a new LLC Im in the process of opening so that I can wind down the current corp and do business in the new one so the new one will be making the sales and the old one winding down. I need your creative legal wisdom here. My wife and I have considered every angle we can and wanted to see what you can think of.

Customer:

oops I didn't mean to send that yet, let me type some more before responding

Customer:

I don't want to start now with the new company because I don't have anymore wild card exemption available to protect the new company if I start doing business through it and give it value. This leaves me the time between the 341 meeting and the 2nd deters exam to wind it down. This will be around a months time. I know the new corp can buy at fair market value the inventory from the old corp but I would need to use as much as possible of the funds paid to the old corp as soon as possible. I don't want to loot the company but wind it down as fast as legally possible. My wife and I only draw $1305 per week which is very low, we use to draw twice that a year ago so we could draw a little more I would think but what about still keeping a little inventory in there still doing a little business and paying ourselves and setting up a SEP IRA? or any other ideas to consider?

WALLSTREETESQ :

You can keep the prior corp and run it as your business, and let the bankruptcy court liquidate it

WALLSTREETESQ :

Typically the new corp can make an offer to purchase the inventory at below the FMV and should be done

WALLSTREETESQ :

Putting some liquid assets into an exempt asset is fine, but be aware of a possible fraus case if the trustee thinks you are trying to hide assets.

Customer:

i don't understand about letting the bankrupcy court liquidate the business??? the business has no value to the trustee because its worth less than the $50,000 judement against it. There shouldn't be any problem with it in the bankrupcy its more after the bankrupcy winding it down and doing business in the new company after it gets through the bankrupcy

WALLSTREETESQ :

so the judgment is still on the bankruptcy, will they try to collect?

WALLSTREETESQ :

I meant the judgment is on the corp, and will not be discharged?

Customer:

my bankruptcy attorney is going to list them so they can't come after me personally. They have a judgement only against the corp

WALLSTREETESQ :

then they can collect on the assets of the corp, so you will need to get rid of the assets as soon as possible.

WALLSTREETESQ :

It is best to put the liquid assets into exempt assets if possible,

Customer:

thats correct. They haven't done anything yet other than the first debters exam. I tried settling with them and they never even responded to their own attorney when I had an attorney submit a formal offer. I think they might not be taking this seriously but I want to act as if they are. I have nothing in the main corp account and I will be using my corporate paypal account and the debit card linked to it. I'm told a paypal account can't be frozen. The inventory is at a 3rd party fulfillment center. Hopefully they don't go there but they could at anytime. The original requested info for the debters exam said in the letter "as of this date" which was Jan 26th so my attorney had me only provide them with the inventory and info as of that date so they don;t really know anything after that and might just wait until the next exam hopefully

WALLSTREETESQ :

how fast can you sell the items?

Customer:

so what exempt assets could I put the corp assets into? your not refering to the bankrupcy here right? just to the judement right?

WALLSTREETESQ :

Will you be doinf this after the bankruptcy or prior?

WALLSTREETESQ :

If this is going to be done after the bankruptcy, I would remove all assets and inventory and put them into the new corp. and leave what was listed in the old.

Customer:

at my normal pace I should be able to sell most of the inventory in the month between the 341 and next beters exam but I will have a fair amount of cash from the sale or if selling at FMV to the new company the olf one will have the cash from the sale and I'll need to do something with it

Customer:

what was listed???

WALLSTREETESQ :

I would not do it during the bankruptcy, as any cash if not exempted will be taken

WALLSTREETESQ :

Listed in the debtors exam

Customer:

ya, I'm not doing it durring the bankruptcy because that would put value into the new company. i don't know what you mean. are you saying leave the $0 that was listed in the debters exam??? The inventory listed was as of January 26th

Customer:

you don't mean to leave what inventory was listed right?

WALLSTREETESQ :

Whatever you listed in the debtors exam should be kept, everything else you should remove

WALLSTREETESQ :

If you listed all inventory, than you have a problem of a potential lawsuit

Customer:

that doesn't seam to make seance? They requested everything for the exam as of the date january 26th. Was I supposed to stop the business when I was served with the papers for the deters exam? I was served in early april, even if that was the case I would have had no idea I was supposed to stop back in january when served in April. Can you clarify? I was under the impression I can keep doing business unless they attach to the inventory or account. they have done nothing but request info (debters exam) so after an exam I'm supposed stop all business???

WALLSTREETESQ :

you can continue business,

WALLSTREETESQ :

In a lawsuit however, when you list inventory in a debtors exam, the collections agency is entitled to collect on those listed assets, and if they try to recover them, you may encounted a problem as they will say that you fraudulantly sold them off.

Customer:

so what if they never tried to collect them, am i required to keep them sitting in the fulfillment center that I am paying?

Customer:

it doesn't make seance..... what I have is there and im not stopping them, don't i have the right to keep selling???

WALLSTREETESQ : 2009 California Civil Code - Section 3439-3439.12 :: Chapter 1. Uniform Fraudulent Transfer Act
WALLSTREETESQ :

3439.04. (a) A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor's claim arose
before or after the transfer was made or the obligation was incurred,
if the debtor made the transfer or incurred the obligation as
follows:
(1) With actual intent to hinder, delay, or defraud any creditor
of the debtor.
(2) Without receiving a reasonably equivalent value in exchange
for the transfer or obligation, and the debtor either:
(A) Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or transaction.
(B) Intended to incur, or believed or reasonably should have
believed that he or she would incur, debts beyond his or her ability
to pay as they became due.
(b) In determining actual intent under paragraph (1) of
subdivision (a), consideration may be given, among other factors, to
any or all of the following:
(1) Whether the transfer or obligation was to an insider.
(2) Whether the debtor retained possession or control of the
property transferred after the transfer.
(3) Whether the transfer or obligation was disclosed or concealed.
(4) Whether before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with suit.
(5) Whether the transfer was of substantially all the debtor's
assets.
(6) Whether the debtor absconded.
(7) Whether the debtor removed or concealed assets.
(8) Whether the value of the consideration received by the debtor
was reasonably equivalent to the value of the asset transferred or
the amount of the obligation incurred.
(9) Whether the debtor was insolvent or became insolvent shortly
after the transfer was made or the obligation was incurred.
(10) Whether the transfer occurred shortly before or shortly after
a substantial debt was incurred.
(11) Whether the debtor transferred the essential assets of the
business to a lienholder who transferred the assets to an insider of
the debtor.
(c) The amendment to this section made during the 2004 portion of
the 2003-04 Regular Session of the Legislature, set forth in
subdivision (b), does not constitute a change in, but is declaratory
of, existing law, and is not intended to affect any judicial
decisions that have interpreted this chapter.

3439.05. A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor whose claim arose before the transfer was
made or the obligation was incurred if the debtor made the transfer
or incurred the obligation without receiving a reasonably equivalent
value in exchange for the transfer or obligation and the debtor was
insolvent at that time or the debtor became insolvent as a result of
the transfer or obligation.

WALLSTREETESQ :

you do have the right to conduct business, however if they have a judgment,

WALLSTREETESQ :

transferring assets will without fair market value is an issue.

WALLSTREETESQ :

In my opinion I would sell the inventory as soon as you can, and consider filing a corporate chapter 7 later on.

Customer:

ya, I would only sell it at FMV and all should be good, I just want to get the bankruptcy over and done with

WALLSTREETESQ :

than you need to make sure the money is exempted, in bankruptcy and collections so an IRA might be best.

Customer:

the cash in the corp should be fine in bankruptcy right? assuming the cash and inventory combined value is less than the $50,000 judgement right

WALLSTREETESQ :

Yes,

WALLSTREETESQ :

The trustee may investigate the inventory and see whether it is part of your personal assets.

Customer:

thats fine, its clearly not...anything else to be concerned with

Customer:

also, if the crediter were to come after me personally because they thought something was fraudulent would they not be able to because they are going to be listed in the personal bankruptcy?

WALLSTREETESQ :

If the debtor is an individual or the debtors are husband and wife, and are operating a corporation or limited liability company, or are principals in a partnership or limited liability partnership, the businesses are not per se assets of the bankruptcy estate, but the shares of stock, membership interest, or partnership interest is an asset of the bankruptcy estate. The debtor is permitted to continue operating the business unless and until the Chapter 7 trustee instructs otherwise. In most cases, if the debtor is experiencing financial difficulties, so is the debtor's business. Similarly, in most cases, the business assets are encumbered by liens in favor of creditors, are leased, are immaterial in value, or some combination of the three.


A Chapter 7 trustee is more likely to permit the debtor to continue operating his or her business if the debtor has proper insurance in place. Chapter 7 trustees are often concerned that they will be liable to third parties injured on the debtor's business premises. Accordingly, the debtor is urged to maintain all appropriate business insurance, including but not limited to liability insurance, if the debtor seeks to continue operating his or her business.

WALLSTREETESQ :

They would argue that the lawsuit against you is for a different issue than a debt liability, it would be a fraud case, but those are very rare

WALLSTREETESQ :

The above is a summary on the Law for Individuals who file bankruptcy when they have a corporation as an asset

WALLSTREETESQ :


<div class="JA_chatMsgAuthor"Customersays:

7:28 PM



thats fine, its clearly not...anything else to be concerned with






7:29 PM



also, if the crediter were to come after me personally because they thought something was fraudulent would they not be able to because they are going to be listed in the personal bankruptcy?



WALLSTREETESQ :

They would argue that the lawsuit against you is for a different issue than a debt liability, it would be a fraud case, but those are very rare and I would not eve worry about it, as they could have colleceted several months ago.





WALLSTREETESQ :

The fact they did not collect, shows they are not serious about the debt owed

Customer:

ya thats how it seams and i want to get the bankruptcy done and over with. so to conclude let me as the last thing:

Customer:

if there is about $10,000 left in cash from buying inventory from the old corp, what do you think would be something to consider to wind down that money.....SEP IRA etc?

WALLSTREETESQ :

yes, an IRA would be fine

WALLSTREETESQ :

As it is exempt in bankruptcy

Customer:

im not refering to the bankruptcy, only after which is when i will be selling the inventory at FMV to the new LLC and need to use the cash

WALLSTREETESQ :

10,000 left if put into a sep IRA is fine for collection purposes in a civil suit as well

WALLSTREETESQ :

The below is summary of California’s garnishment exemptions. Overall, the state has one of the more complex schemes of exemptions, and any California debtor who may face garnishment or other collections efforts is well advised to seek legal assistance to make sure he or she is taking advantage of all the protections available to him or her.)



  • Pensions: all public and private retirement benefits are protected, including distributions from IRAs, state and county worker benefits, and firefighter or police office benefits.

  • Public benefits or assistance: California protects a broader array than most states, including workers’ compensation; unemployment benefits; aid to families with dependent children; aid to the blind, disabled, and aged; student financial aid; relocation benefits (when someone is forced to move, owing to government action); and even union benefits owing due to a labor dispute.

  • Insurance benefits: disability and health benefits; life insurance proceeds if the policy prohibits proceeds them from being used to pay creditors; matured life insurance benefits, up to the amount needed for support; homeowner’s insurance proceeds, up to the real estate exemption amount (varies with type of property, beneficiary age, and family status)

WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 15590
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
WALLSTREETESQ and other Bankruptcy Law Specialists are ready to help you

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