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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39027
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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My dad has a ucc1 on my restaurant, I just closed the restaurant

Customer Question

My dad has a ucc1 on my restaurant, I just closed the restaurant and now I want him to issue a defalt on the corperation so he can be first in line to get paid. If I took out the fixtures out already and start selling them can I start repaying his debt? I owe him $450,000 and the equipment is only worth about $20,000 and I owe others about $30,000 and a broken lease for 8 years remaining, I will BK the corperation when all is said and done
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 7 years ago.

If you make payments to an "insider" (includes a close family member) within 12 months of filing for bankruptcy, the bankruptcy trustee can void the transaction and recover the payments as a "preference transfer." This is especially true where the fair market value of the equipment is substantially less than the loaa amount. The transaction may look like a sham, and the trustee will undo it.


You may be better served to treat your father the same as any other creditor, and then pay him back outside of bankruptcy, based on your moral rather than legal obligation.


Hope this helps.


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