How To Transfer Inventory From One LLC to Another...
..Anyone have any familiarity with transferring assets or inventory from one LLC to another with the 1st LLC dissolving (meaning a transfer done prior to filing a chap 7)..How is the transfer transparent and acceptable to a Trustee? Thanks!
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The buying LLC must pay fair market value for the assets/inventory to the selling LLC.
In short, money must change hands. -
LLC followup
...Does this still apply if the tranfer of assets from One LLC to another when both LLC's owned by same person? if so, would a common Bill of Sale document work? and if so, where would the sale proceeds go if the first LLC disolves? ThanksComment
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Crazycat, I would assume that if you are dissolving the first LLC and intend to file Chapter 7 on it, if you applied the asset sale proceeds to anything other than the first LLC's debts you might end up with some serious problems.
ALL asset transfers prior to Ch7 -- legitimate or not -- are VERY closely scrutinized, and it doesn't take much to end up with a "Presumption of Abuse" from a Ch7 trustee in this scenario, so you may want to consult an atty on this particular issue just to be *absolutely* sure a trustee will not have a problem with it. If you handle it incorrectly now, you may have to wait a couple years to file bk (to put ample time between the questionable transfers and your bk), or file and have the bk tossed, and I know you probably don't want that.
This is well worth an atty consult... that's my thought on it, anyway.
Good luck!!!Nolo Press book on filing Chapter 7, there are others too. (I have no affiliation with Nolo Press; just a happy customer.) Best wishes to you!Comment
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Crazycat, what you are suggesting is a sham transfer to avoid creditors in any context.
The only way to effect a transfer of assets from one company to another, ESPECIALLY, when both companies are controled by the same person or persons, AND the selling company has creditors that will go unpaid, is for the buying company to pay fair market value for the assets and then the selling company use those proceeds to pay creditors. Any other way of doing it is a fraudulent transfer and the creditor can simply allege that the buying LLC is an "alter ego" and hold the buying LLC liable for the debt as well as hold the owners of the selling LLC liable as "trustee in assets" of the selling LLC.
Nice try, but try again.
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!! READ !! Tranferring Asets From One LLC to Another......
....Interestingly, It was not my idea to transfer assets from One LLC to another...!!! It was my attorney's idea !!!! 
After I ran the idea through a CPA and continued to scrutinize it more myself, I displayed it here for general reaction...(A good CPA did a thumbs down too)
...My common sense and thoughts on the semi complicated exercise of shutting down One LLC and opening another, transferring bank accounts, merchant accounts, etc.,etc. was Not to do it because I did not understand the reasoning (or lack of)...Again, This was advice from an experienced attorney in a major firm!!!! (No wonder they haven't emailed me back after I emailed then questioning their wisdom!!! Imagine That! Again, I'm Glad I ran it by here for final affirmation of my thoughts (and actions) Thanks!..
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....quick followup on Transferring assets from One LLC to another..
...to clarify, the advice given to me was from an attorney at my initial consultation with them (I have not hired them to date).This was An attorney that was actually Highly recommended to me from someone here on this forum!
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