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Interested in information concerning personal chapter 7

Interested in information concerning...

Interested in information concerning personal chapter 7 bankruptcy as a member of a 50/50 LLC

Lawyer's Assistant: What state are you in? And has anything been officially filed?

Kansas

Lawyer's Assistant: Has anything been filed in civil court? If so, what?

The partners were in negotiation of selling out or buying out the LLC

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

A petition has been filed for dissolution of the llc

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Answered in 3 hours by:
11/4/2017
DrakeLAW
DrakeLAW, Attorney
Category: Bankruptcy Law
Satisfied Customers: 1,038
Experience: Attorney at Drake Law Firm PLC
Verified

Hi, my name is ***** ***** I look forward to helping you, please give me a moment to review and possibly research answers to your question.

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The membership interests of the member that files bankruptcy become property of the bankruptcy estate and subject to sale by the trustee.

Do you have specific questions?

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Customer reply replied 7 months ago
The other member has filed a petition to dissolve and we know the business is insolvent. We won’t be able to pay the deficiency. Additionally, the members and spouses all received payments for services rendered. Would that mean a non filing spouse’s pay would be demanded to be turned over for the past year? It kind of seems to me like all members and spouses would be insiders?

Yes, the members and spouses are insiders and the trustee could possibly seek a clawback of money paid to insiders over the past year.

Please kindly rate the question so I may be credited. Thank you. You can still ask follow-up questions.

DrakeLAW
DrakeLAW, Attorney
Category: Bankruptcy Law
Satisfied Customers: 1,038
Experience: Attorney at Drake Law Firm PLC
Verified
DrakeLAW and 87 other Bankruptcy Law Specialists are ready to help you
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Customer reply replied 7 months ago
Would the payments made to debtor(s) also be demanded for turnover? The llc provided the only income to the household so the money was used to pay living expenses.

Hold on, I am sorry. Let me substantially change my answer and perhaps give you some relief.

No, if a member of the LLC files personal bankruptcy there can be no recovery of payments to other members. My prior answer only applies if the LLC itself files bankruptcy.

Does that clarify it?

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Customer reply replied 7 months ago
That helps some, yes. So say his spouse worked as an independent contractor for and received pay from the llc as well, but she’s not able to file chapter 7. Do the payments made to her for administrative services become insider preferences?

There is absolutely no issue with insider payments to anyone from the LLC since the LLC itself is not the bankruptcy debtor. Even the member that file bankruptcy has no issues with preferences or insider or turnover of money received from the LLC.

Does that answer your follow-up?

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Customer reply replied 7 months ago
Amazingly, yes! I just may sleep tonight. Thank you so much!!

Yes, I picked up on that and I am so glad I caught my error after initially reading your question and was able to give you some relief. It feels really good to make a difference for someone. Have a good night's sleep!

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Customer reply replied 7 months ago
Are you with a bankruptcy firm?

Yes I am.

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Customer reply replied 7 months ago
We need an attorney.

I am not able to assist you in Kansas.

I don't have any referrals for there, you might ask acquaintances, do a google search, or use this website:

http://network.nacba.org/advanced-search

The attorneys on that list are generally quite good but may have more of a consumer focus. Worth a search though. Good luck.

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