Should I make a preferential payment from S-Corp? S-Corp not filing corp BK.

[phoenyx]

Background
I live in Michigan and own an S-Corporation incorporated in Michigan. The S-Corporation is severely in debt, and I signed a personal guarantee on most of its debt. With help and advice of my attorney, I am going to be filing personal Chapter 7 bankruptcy. We will not be filing corporate bankruptcy since it wouldn't discharge the company's debt.

Unfortunately, a large amount of the S-Corporation's debt is to my father. Regrettably, my S-Corporation loaned money from him when both of us thought it would certainly be paid back.

The rest of the S-Corporation's debt is to the IRS for employment taxes, to the State of Michigan for employment taxes and sales taxes, and to several unsecured credit cards and loans.

I have zero assets. No house, and a car worth $1,000 maybe. No cash. It appears that the IRS and State of Michigan won't be going after me for Trust Fund Recovery Penalties for the employment and sales taxes, because they would be uncollectable.

My Question
I'm in the process of liquating the S-Corporation's remaining inventory. It isn't near enoguh to cover its debt. Since I'm not filing corporate bankruptcy, can my S-Corporation take the cash left after the inventory liquidation, and give it to my father, paying back a small amount of its outstanding loans?

I know this would be a preferential payment. I know that if the company were forced into corporate bankruptcy by its creditors (if that can even happen after I revoke its charter) that a trustee could force my father to give all the money back.

But, can I give it to him anyway -- and explain the situation, saying put it aside and wait a year or two to see if he is ever told to give it back? And hope it never comes to that?

Are preferential payments like this illegal in any way? If not, I know he wouldn't rely or use the money until it was "in the clear." I don't want to think about doing this if it risks anything more than having to give the money back.

And YES I'll be talking this through with my attorney, if I were to do this. I just like hearing the opinions on this forum before I take many of my ideas to my attorney. The advice and opinions on this board are incredible.

[HHM]

Unfortunately, your question is beyond the scope of the experience of our members. Regarding the S-Corp, in the end, the practical considerations will outweigh the legal considerations...what will happen will depend on how aggressive the creditors wish to be. If certain creditors, i.e. the taxing authorities want to get aggressive, they can probably undue the payment to your father and require him to pay that money to the creditors. The real question is whether that scenario is likely to happen, and no on here can really say.

[phoenyx]

Unfortunately, your question is beyond the scope of the experience of our members. Regarding the S-Corp, in the end, the practical considerations will outweigh the legal considerations...what will happen will depend on how aggressive the creditors wish to be. If certain creditors, i.e. the taxing authorities want to get aggressive, they can probably undue the payment to your father and require him to pay that money to the creditors. The real question is whether that scenario is likely to happen, and no on here can really say.

Thanks for your reply. I definately know that no one can predict how my creditors will act.

Do you know if it's possible for such a preferential treatment to be considered illegal rather than just a civil matter? I don't want to do anything that's illegal. And, do you know if there's any way they could make my father pay penalties or interest -- if he paid immediately upon demand from a court?