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My question regards bankruptcy. I want to know if my corporation

My question regards XXXXX XXXXX...
My question regards XXXXX XXXXX want to know if my corporation would
qualify.
It is a corporation. I am assuming that I would file a Chapter 7.
The corp has a long standing negative cash flow.
It is paying it's invoices -for products to venders 60-120 days late.
There is minimal- perishable inventory & no valuable fixtures ect.
It is maxed out on credit cards & is barely making minimum payments.
Can it discharge all of it's vendor & credit card debt.
Not concerned about bad credit report as officer of corp has IRS liens ect.
Does the bankruptcy appear on the "owners" credit report & effect their ability
to get any unsecured debt & for instance auto lease- credit cards?

Is it possible to sell remaining inventory after filing the bankruptcy & keeping that money.
Is it necessary to hire an attorney & ball park on that cost?
How long does it take for court to determine eligibility?
What other criteria is there?
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Answered in 46 minutes by:
8/3/2010
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
Verified
Hi JACustomer,
A Chapter 7 does not discharge debts of companies, including corporations. Filing a Chapter 7 results in the liquidation (or sale) of any assets of the corporation, and this money is used to pay the creditors. The end result is that the business closes.
When corporations are having debt issues, it is sometimes helpful to file a Chapter 11, which allows the corporation to pay off its creditors - in full - over time.
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Customer reply replied 7 years ago
So, there is no other means for a corp to discharge debts? Chapter 11 or 13? With a Chapter 7 what if there are no assets to liquidate? Can't the debts be "discharged" in some manner? Is the only option to close the business & to be pursued by the creditors? They can't be kept at bay?
There is no other way to address the issues cited in previous email?
Did you personally guarantee any of the corporate debt?
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Customer reply replied 7 years ago
Personally guarantee? no to the vendors. Is credit card debt personally guaranteed?
There is no other debt. utilities?
When you first applied for the credit cards, did you sign your name as a co-signor or a personal guarantor? Same question for the utilities - did you open the utility account(s) in the corporation name only, or also in your name?
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Customer reply replied 7 years ago
At this time I am not sure the answer to those questions.
What is i did & what if i didnt?
If you did personally guarantee any of the corporate debt, you don't really have to worry about them coming after the corporation if the corporation has no assets - you would have to worry about them coming after your personal assets.
If you did not personally guarantee the corporate debt, you basically do not have to worry about them coming after your personal assets, or the corporate assets.
Additionally, if you did personally guarantee, and if the debt is not being paid, you may be able to file a personal - not corporate - Chapter 7 Bankruptcy to protect yourself.
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Customer reply replied 7 years ago
I will sort all of that out. Bute- if i did File personal Chapter 7 wouldn't my assets like commercial (not personal) real estate be vulenrable- seized.?
Yes - that is why I said you "may" be able to file a personal Bankruptcy.
Do you have commercial real estate that has significant equity, where the market value is more than the balance on the mortgage?
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Customer reply replied 7 years ago
I would like to finish this conversation after I get clarity on these issues. I do appreciate your time and expertise & will give you a tip & recommendation. I am sorry if I am asking you to repeat somethings as I want to be able to wrap this thing up -now & feel as though I have a better understanding of my options.
I would like to get a response to each of the issues that I sited in my 1st email. Each very brief itemized & short summary of potential strategy at the end.
1. Is Chapter &7 the correct one to file given my situation?
2. How would potential Chapter & -Personal play a role in this. The corp officer has no assets other than
a residence- that has an IRS Lien on it.
3. Re- the payables to vendors are not secured /-corporate credit cards - not sure how to find out-
what if they are /what if not- secured by corporate officer- or re by an employee- spouse?
same question re utilities.
4. Is this - ChapterXXXXXto "discharge" the corp debt -& is there another term for it?
5. There are no assets to be disburse to vendors ect - How would they try to collect -are they not able to pursue this after it is filed? When/how can they come after personal assets?
6.After filing -can I sell remaining inventory & keep that money?
7. The 2nd to last paragraph -a little confusing -can you clarify?
Again, I do greatly appreciate your time & I seek to finish this up in short order & will follow with additional compensation.

1) No - Chapter 7 will not discharge the corporation's debts.

2) A corporate Bankruptcy will not affect the personal assets of the officers of the corporation.

3) Not sure what the question is here.

4) Same as number 1.

5) If the corporation has no assets, there is nothing for the vendors to collect. Vendors cannot collect corporate debts from personal assets - unless the debts were personally guaranteed, or if fraud was involved.

6) The Bankruptcy will take most inventory to satisfy creditors. If there is any remaining, it can be sold.

7) If there are no corporate assets, and the debts were not personally guaranteed, there is nothing for the creditors (vendors) to take.

 

cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
Verified
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cfortunato
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
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