When a company bankruptcy under either Chapter 7 or Chapter should be submitted 11? A common scenario in today's society occurs when companies or individuals are a part of the partnership or limited liability company (LLC) and the economy fails, and then they have to deal with the different options for their own bankruptcy filing. Many questions arise, how should one or both the corporate and individual owners? If yes, which chapter of bankruptcy should be filed?This article discusses a few of the many issues involved.
Scenario 1:
Fred and Wilma to 100% of the shares of Dino Corporation. Dino Corp. makes gravel of pebbles for Slate Gravel Company. However, several processes and a slowdown in the economy, Dino Corp. is closing its doors and shut down. Among the debts the company owes money to the Internal Revenue Service for employee payroll taxes, money to suppliers, employees and the credit card company. Furthermoreguaranteed due to a couple of lines of credit, the person of Fred and Wilma.
Dino Corp. has some assets, mainly machinery and equipment, but also inventory spare flint.
Fred and Wilma have now sued some of the personal guarantees, and the IRS is after them for the employee wage tax.
Issues:
Should Dino Corp. a company file for bankruptcy? If Fred and Wilma file bankruptcy, or will their financial To reduce problems her life a shambles? (Sorry)
Analysis:
The first thing is to understand that corporations do not benefit from discharge of his debts in Chapter 7 (liquidation) bankruptcy. Even if the company could reach its debts in a Chapter 7 case, set them free, it is not / not the liability of owners .
Even if they do not receive a discharge of debts, there are some good reasons to file a Chapter 7 times> Bankruptcy for a company. First, it allows the enterprise's assets are sold and the proceeds paid by an independent liquidator. Thus the owners of the burden and the responsibility of these tasks will be to. In addition, it provides notice to all creditors of the company that the only assets will be liquidated from the now dissolved company and as part of Chapter 7 case and therefore paid for them there is nothing left to the processes in a filego after the bankruptcy has been completed.
May include, apart Whether Fred and Wilma may submit their own bankruptcy only after full consultation with a bankruptcy lawyer should be determined, but it may be the only way they have to deal with their debt (the extra debt from the above, because these lists only their obligations stemming from the company came). What chapter they file depends on their personal financial situation, debt, Income and expenses.
Ownership of a company are personally liable for some but not all the debts of a company. These employees include payroll taxes (the Trust Fund section under Internal Revenue Code 6672), and all debts were personally guaranteed by them.
There are many other issues are involved, as well as scenarios with individual entrepreneurs (sole proprietorship / DBAs) and partnerships, but these are the subject of future articles for small businesses> Bankruptcy.
See business bankruptcies for more information about this topic.
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