Business Bankruptcy Law | Small Business Bankruptcy Laws

I live in Florida. I work at a small vitamin store and am very close to the owners family. My bosses husband own an auto body shop. He is currently going through quite a few financial situations. So I guess it was made clear to him that if he "sold" his company to me and put the company into my name they cant seize his assets. So I guess he is filling for bankruptcy and doesn’t want them to take all of his equipment and cars that he owns out right and its all paid off. So my question is, is this legal and does this put me at risk to anything? Like if something were to happen when the business is in my name and they sue the company then they would be suing me right?

Because Natalie has been so successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each other’s business expertise. Curtis and Natalie next evaluate the different types of business organization, and because of the advantage of limited personal liability, decide to form a new corporation.
Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie’s business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents as a location for her cookie-making classes and demonstrations of the mixers that she sells. Natalie will also hire, train, and supervise staff hired to bake cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel, and the coffee shop will provide one central location for selling the mixers. Combining forces will also allow Natalie and Curtis to pool their resources and buy a few more assets to run their new business venture.
The current market values of the assets of both businesses are as follows.
Curtis’ Coffee Cookie Creations
Cash $ 7,130 ,000
Accounts receivable 100 800
Merchandise inventory 450 1,200
Equipment 2,500 1,000*
*Cookie creations decided not to buy the delivery van considered in chapter 10.
Combining forces will also allow Natalie and Curtis to pool their resources and buy a few more assets to run their new business venture.
Curtis and Natalie meet with a lawyer and form a corporation on November 1, 2010, called Cookie & Coffee Creations Inc. the articles of incorporation state that there wil be two classes of shares that the corporation is authorized to issue: common shares and preferred shares.
They authorize 100,000 no-par shares of common stock, and 10,000 no-par shares of preferred stock with a {content}.50 noncumulative dividend.
The assets held by each of their sole proprietorships will be transferred into the corporation at current market value. Curtis will receive 10,550 common shares, and Natalie will receive 14,630 common shares in the corporation. Therefore, the shares have a fair value of per share.
Natalie and Curtis are very excited about this new business venture. They come to you with the following questions.
1. Curtis’ Dad and Natalie’s grandmother are interested in investing ,000 each in the new business venture. Curtis and Natalie are considering issuing them preferred shares.
What would be the advantage of issuing them preferred shares instead of common shares?
2. Our lawyer sent us a bill for 0. When we discussed the bill with her, she indicated that she would be willing to receive common shares in our new corporation instead of cash for her services. We would be happy to issue her shares, but we’re a bit worried about accounting for this transaction. Can we do this? If so, how do we determine how many shares to give her?
Instructions
(a) Answer Natalie and Curtis’ questions.
(b) Prepare the journal entries required on November 1, 2010, the date when Natalie and Curtis transfer the assets of their respective businesses into Cookie & Coffee Creations Inc.
(c) Assume that Cookie & Coffee Creations Inc. issues 1,000 {content}.50 noncumulative preferred shares to Curtis’ Dad and the same number to Natalie’s grandmother, in both cases for ,000. Also assume that Cookie & Coffee Creations Inc. issues 750 common shares to its lawyer. Prepare the journal entries for each of these transactions. They all occurred on November 1.
(d) Prepare the opening balance sheet for Cookie & Coffee Creations Inc. as of November 1, 2010, including the journal entries in (b) and (c) above

I have a non-collateralized loan (0K) in my personal name used for my small business. I cannot make the payments any longer. I know this is going to court. I am in Florida, so my house and head of household income are not touchable. Other than that I really do not own anything – maybe ,500 in a vehicle. If the bank gets a judgment, and there is no way to pay it, what happens? Does it hang around until I get assets to cover it? ie if I win the lottery, do they get theirs? A bankruptcy attorney said I could file for BK but do I really need to? What is the long term problem of a judgment, other than negative credit?

My husband and I just got royally screwed by our employer and after 4 months with no pay decided to leave our jobs. I know that sounds crazy and you are thinking why would you wait 4 months to leave. Well it is complicated. You see for the last 9 years or so I have been employed by a business that I rightfully owned and help to start. This was a family business but it was all in my name. So this business slowed down so much so in the last year that we decided it was time to move on and try and do something else. My husband and I had always wanted to open a honky tonk and I thought this might be the perfect time. So with some discussion, I talked my husband and my dad into opening a large scale nightclub. Jason and I could not put the business in our names at this time so it was put into my dad’s name. We sold all of the assets of the business that was in my name and put them into the start up of this nightclub. Jason and I had some doubts about my dad in the beginning but we thought we could trust him. Unfortunately we where wrong. We should have been making huge profits but my dad swore we where not making money. I could look and see that we had made money. He would say he was paying bills but we where getting calls saying the bills weren’t paid. Dad wouldn’t show us the books or turn them over. We wanted to hire and accountant or to do the books ourselves. Not to cut my dad out of money but to make sure it was being done right. My dad refused saying that my husband and I had nothing in this company but a couple months of work and that this was all his and he would do what he wanted with it. All his are you kidding me! He has got to be out of his fringing mind. Actually he is. But anyway now my husband and I are like super behind on everything. We can’t pay our bills. We are looking for jobs but they are harder to come by these days. There has got to be some kind of legal recourse for me here it is just killing me to watch someone else make money on our hard work while we are trying to figure out how to keep from filing bankruptcy. It is a weird situation but if anyone knows anything about what I might be able to do here I would be so thankful. I am not even sure what kind of lawyer I could discuss this with. PLEASE HELP ME!

I’m self employed. I recently fell on some hard times with my business and this economy. I’m still making money, but not nearly enough to cover my mortgage, business rent, and credit cards. For the past few months I’ve been spinning my wheels with the credit card companies and mortgage mods, but those just seem impossible. They aren’t helping me and are now hurting my credit.

I’ve heard about this bankruptcy thing, but I don’t want to lose the few assets and savings I have. I want to keep them in case I lose everything or for real emergency. If I sell it all off or use my savings I’ll still be behind so I need another plan. Thanks much for any advice on this!
thanks andy. what’s killing me is my mortgage combined with my business rent. I should be doing better in 3-6 months, but at this rate my credit will be ruined unless i somehow change something. i’m working on new income of course, but it just doesn’t seem like it will be enough and fast enough

My closest friend just phoned me to pick him up because his car has been repossessed. I’ve tried to help with organizing his finances by consolidating but he didn’t listen. Now his 1 car has been repossessed. He has 3 other cars, one he’s behind by many payments & is upside down & owes more than it’s worth. He had total 4 cars, 2 he owns – 1 isn’t worth much (old) & the other IS worth a LOT. The other 2, one is now repossessed & the other will likely also be repossessed. He’s upside down on both & has not made payments on either in several months & isn’t likely to come up with the money to get caught up. Even if he did get caught up, he would need minimum of k on EACH of the 2 cars to be even with the value of them. (He can’t sell them unless he comes up with k per car)

He asked if he should voluntarily have this one repossessed also. He’s considering filing BK now. He’s asking me about what’s going to happen. I told him it’s possible they will win a judgment against him & may have the right to cease assets to pay his debt for the money he will owe after they sell his car at auction (the difference of costs from the loss to them).
Can they cease his other assets? (I told him to sell the valuable car asap to keep them from ceasing it – just in case)
I also told him to consider a bankruptcy filing.

Please tell me, does anyone know what rights they will have now?
Is filing for BK the best way out of this mess to start new & fresh & remove old habits? Or is there another way? He knows this would remain on his credit for 10-years if he files. He isn’t likely to have the money to get the payments caught up, also since he’s so upside down, why be prisoner to all of this if there’s a legal way to start new?

Someone with legal knowledge, please help me with this, I’d like to advise him with facts that will really help him. He’s a mess & very stressed from late notices, phone calls & now they are taking away from him these things. How much worse could it get? What is the wisest solution?

P.S. – He also owns a small business (suffering)

We may have to file bankruptcy b/c my hubby’s building business is not doing well these days…if we file personal bankruptcy will they look at and take all assets to pay off debt under chapter 13? My problem is that my parents put their paid for house in my name and my 2 brothers names about 5 years ago because they are in their 70’s…they have also put money in my name although we still give them the interest checks on it. They did this to avoid a potential nursing home someday getting their assets…..anyway, if we file bankruptcy will they go after these assets? If so, what will they do? Can I take these assets out of my name and then file bankruptcy? If so, will they still be able to tell they were recently in my name? Do I need to wait a certain period after removing these assets from my name before filing? We would really like to keep our house and cars but the credit card bills are really hurting us.

I really need help out in this question.

Joseph has lately graduated from a university with a degree in BA, but wasn’t be able to find a job. He has decided to file a Chapter 7 petition with the Bankruptcy Court. He has the following assets:

a. a 0 ring.
b. 00 in equity in a condominium secured by a mortgage.
c. 0 a week in unemployment benefits after being laid off from his job.
d. 0 in business administration books, including a hardly used copy of Business Law.
e. a ,000 retainer for his teeth prescribed by his orthodontist.
f. ,200 in equity in a new car which he purchased with a loan from the bank.

His debts are as follows:

a. ,000 in student loans.
b. ,000 to the bank for his car. The loan is secured by the car.
c. ,000 in unsecured credit card debts.

What can he keep. What will each of the creditors receive? Explain
State: ALABAMA

Hello,
We own a franchisee. However we are so much in debt now we are forced to file for bankruptcy. We are filing personal bankruptcy because the business debt is personally guaranteed and we also borrowed from our personal cards to put in the business.
the Franchisor is the sub-leaser of the place. We are behind two months on the lease and owe the Franchisor royalties. Now we have closed the shop and the franchisor wants the keys back, because the lease is under their name and because of the owed royalties.
we removed all assets that we could physically remove.

They told my lawyer that they know I don’t have any money to pay so they’re not even going to sign an agreement that I am transfering the business over to them.
they said they’re going to go to court and ask the judge to have me give them the keys.
I will give it to them but I want to be sure they’re going to be able to do anything else to us. we don’t have any choice and we have no money. they have the upper hand now.
What are they able to do to us? and after I hand over the keys can I just dissolve the corporation

also when filing for personal bankruptcy does my corporation automatically fall under that? does it get dissolved?

please help!

I empathize and sympathize with those who work for struggling American automakers and letting these companies fail would hurt the many people employed by them and their families. Not to mention it would hurt our overall economy.

At the same time, that is how private business works. If you have bad management and/or a bad product, your company goes under. For years American manufacturers have made products that are perceived, [mostly] rightly or wrongly, as being subpar compared to Asian or European cars such as Toyota.

Also, on Anderson Cooper 360, I heard that some of these autoworkers have ridiculously good contracts to the point that its draining the company; Wages up to dollars an hour, powerful unions demanding high benefits or the treat of a strike, 96% of their salary is still payed for up to 2 years after they are laid off (essentially money for not working), etc.

It makes it hard to decide whether these companies should fail when thousands of American jobs are on the line, but at the same time, there’s a reason bad companies fail. I think perhaps Chapter 11 would be best to restructure the company and its management and assets; what are your thoughts?

I am looking into filing personal bankruptcy but I have a problem. My wife and I are self employed and own an LLC we make very little from this LLC and it has 2 small assets that might not be worth anything maybe less than 0. We only gross 00-2500 a month. Without my wife and I the company is worthless. Our customers would not be serviceable without us. We get all our income from the business. I want to know if we file personal bankruptcy would that mean we can’t do business anymore? Would we have to change our name? Are there any online references that explain this process and how it would go down?

Wallstreet……now the Auto Industry. When are they going to learn that propping up a failing business model with YOUR tax dollars won’t help the terminally doomed? I have a better solution (feel free to pick it apart if you can):

Let the auto industry fail. Then, when they file chapter 11, lay it out like this. First, fire your ENTIRE workforce and dissolve any and all union contracts. Second, liquidate your vast stock of unsold vehicles by slashing the price by 50,60, or 70%. Get rid of them. You may take a loss but at least you retain some liquidity. Sell off any peripheral assets. (corporate jets, office buildings, penthouses). Get rid of dealer contracts. More liquidity. Lastly, refresh your business model. Build cars people not only WANT but can AFFORD. Re-hire your staff at reasonable wages on a "right to work" basis and ban unions from the premises. Give them healthcare "help" and a 403b like the rest of us.

Now….. you MAY be able to compete with Toyota. Good luck.
Destiny. Sorry dear, but those people are going to be unemployed regardless. It’s just a matter of time.

1.
The U.S. economy has lost 2.64 million jobs since you took office. The unemployment rate is 9.5% and rising. The good scenario is one in which the unemployment rate begins to decline early next year. The Vice President said your Administration misread the economy. You said you had incomplete information when proposing the stimulus. Yet you have said you would not change anything about the stimulus if you could. If the facts have changed, why doesn’t it make sense to change your policy?

2.
Last month’s jobs report was the first since you took office that was worse than the prior month. Do you think the economy is getting stronger or weaker right now? If the next jobs report gets still worse, will you re-evaluate the need for a change in fiscal policy?

3.
Do you maintain your promise not to allow taxes to be raised on people earning less than 0,000 per year? Will you insist that health care legislation conform with this commitment?

4.
Chrysler and GM have exited bankruptcy. Are U.S. taxpayers done subsidizing these firms? What is your exit strategy from taxpayers owning much of GM and Chrysler?

5.
You proposed spending money from the TARP to prevent foreclosures, help small businesses, and to buy toxic assets from banks. In June CBO said they had found no evidence that any money has been spent for any of these programs. How many foreclosures have been prevented, how many small businesses have received loans from, and how many toxic assets have been purchased?

My parents’ small business started going under about two years ago. They sank every penny they had into it. They were unable to continue paying the mortgage on their house, and I had to start paying for it, until one year ago they transferred it completely to me. They are no longer listed on the ownership docs, and I’m listed as the sole owner.

They are now being sued by the credit card company because they’re unable to pay the debt (about 6,000). They have no assets (no car, no business, no property, no valuable possessions, under 0 in the bank) and are living with my sister. Neither one is working.

Three questions:

1) Can the credit card company come after my house, claiming they transferred it to me to hide assets? This is not true; they had no idea at the time of the transfer that they wouldn’t be able to pay the credit card off.

2) Is there any reason for them to go through the bankruptcy process, since they are too old to ever work again, so there are no future assets to protect?

3) What is the worst case scenario with the credit card company trying to sue them?

I own a small business in NJ, recently we were working in a building that had a small pipe burst-on the same floor we were working on.

The building was very old and their was no way to shut off the water-simply let it all poor down until it was empty.

The insurance company of the building believes we are liable for the incident and must pay 0,000-which I don’t have as a 22 year old or even within my own companies assets. However, they agreed to accept 50k as a lump sum payment.

My insurance company refuses to pay anything because they say my class under business description is "junk dealer".

I do own 3 trucks under the company name and I am making payments on a 4th, should I sell all my assets to a new company, declare bankruptcy and change my name? I have very little cash on hand and have no other assets in my own name.

I’ll try to summarize.

I had a business for 3 years. It turned into a flop and I owe jsut about everyone money.
I have had a very disorganized business as well as taxes I haven’t filed yet becasue I haven’t had the money to cough up.

Add on top of this I have been out of work for over a year between getting hurt at one place I did finally land a job, and a motorcycle accident.
Make a long story short, I haven’t worked in a year. Can’t find a job and I’ve sold a ton of stuff just to get by and pay the bills.

I am considering bankruptcy, but I am nervous of the the fact that between getting hurt, (a small lawsuit followed, but I lived off the money….it wasn’t much) not being able to find work and living off assets that I may be given a hard time if I try to file.

Anyone have any advice for this disaster?

I had small personal business.I used my social security number for tax purposes. My partner has deseased. Now I owe about 260,000 dollarars.Did not file tax returns since 1999. Trying to file chapter 13 . With almost no money. Help. Can federal tax,s be erased. Talked to a attorney once, he said yes you can ,but onyl once in life. My present attorney says no you can not. For more reasons then one I feel I have the wrong person to represent me. I am afraid to change for loosing money already spent.This arrorney does not have my best intrest in mind . He took case Knowing I did not have cash up front.Said he would use property to get paid. Now every thing is cash, of which I don,t have much. Now anyway.I have property in my name and mothers name who passed away reciently and did not leave a will. I have three sisters and a brother. Attorney is going to try to make me executor, then liquidate assets. I don,t know what he is doing until last minute . I a Need Help.

I just found out I owe roughly between ,000 to ,000 in state and federal income taxes for 2006 from a failed business venture. I checked this with an accountant, and I definitely owe the taxes. The company already filed it’s return and my K-1, showing I had the income, so the IRS theoretically knows about it. I’m 24, have no assets or property, already have ,000 in credit card debt, and have been unemployed for over seven months. I’m starting a job next month that will pay me ,900 a month, so I was excited to get back on my feet. But I’m worried that paying off the IRS debt in installments will wreck me and ruin any chances I have to save up.

1) If I set up a payment arrangement, how much should I expect to pay per month, and for how long?
2)I haven’t filed my return yet (got extension). How long b4 IRS comes after me?
3)What happens (realistically) if I ignore it? Could I claim Chapter 7 to erase it (making only ,000 a year)?

I really need realistic advice here.Thanks!

My dad has a large credit card debt (mostly from my mother’s illness before her death… years ago) and has recently been forced to retire due to his small business failing. The business had no assets (no equipment no owned buildings, etc.) and basically no longer exists in any form. He does not own a home or have a mortgage. The only thing he does own is an old car, really. His bank account is at 0 right now.

He has recently moved in with me. I own my home (well, paying a mortgage, anyway) and have about ,000 in my bank account right now.

Anyway, to make that short, there is no way he can pay off the credit card debt and I’m just wondering what in the world is going to happen with it.

Is there any danger that when he can’t pay it or declares bankruptcy, they’ll come after me?

I own five properties plus I own one semi and trailer, which is for my trucking business. I am really struggling and behind on almost everything, including all of the mortgages. (Canton, OH has no jobs and no one is paying their rent, plus trucking is obviously very slow right now). I filed Chapter 7 in July, 2002, so I think I am eligible again. Will they restructure all of the debt, or will they just seize all of my assets including my home, the truck/trailer, and rental properties? Will I be able to keep any personal property that I am current on payments for, like my truck and motorcycle? I work full time as construction manager, which is why I am concerned about losing these side ventures. Any input or sharing of experiences is welcome and appreciated.