Can I repay myself?

[howtoplan]

I have a company that has a business loan for 1million dollars that the bank has chosen not to renew in June. I can't pay it off, so we will be filing Chapter 7 due to the fact that our total debt load will be around 2million.

We are current on everything, but we are wondering if we can repay a small portion of the loan we made to the company in excess of 400K and not pay the bank? The amount might be 10K-50K.

[justbroke]

You need a good business bankruptcy lawyer. Part will be determined by what the organization of the company is (LLC, S-Corp, Sole Prop, etc). I would venture to guess that the Trustee would see it as a preferential payment and sue to get it back from you, unless the type of business entity is really an extension of yourself (S-Corp, Sole Prop, partnership, etc).

[spearmint]

How do you find a good "business" bankruptcy lawyer?

[justbroke]

How do you find a good "business" bankruptcy lawyer?

Word of mouth. I would look to lawyers who could handle a Chapter 11. Then check the local bar to see if there are complaints.

I say check to see if they do Chapter 11s, because those are used more for business restructuring.

[howtoplan]

Well it is a S corp...what do you think?

We don't want to restructure and the costs of Chapter 11 are outrageous, if they prove to be successful.

[AngelinaCatHub]

Word of mouth. I would look to lawyers who could handle a Chapter 11. Then check the local bar to see if there are complaints.

I say check to see if they do Chapter 11s, because those are used more for business restructuring.

[justbroke]

We don't want to restructure and the costs of Chapter 11 are outrageous, if they prove to be successful.

I didn't mean to imply that you should file Chapter 11. I was just making an observation that a lawyer who can handle a business Chapter 11, could certainly handle a business liquidation under Chapter 7 too. But, they'd make less money on the Chapter 7.

I just wouldn't go with an ordinary consumer Chapter 7 firm.

Plus, you mentioned that it's an S-Corp. As my bud 'Hub wrote, my comments should be measured by where they are coming from... an anonymous person sitting at a keyboard at 11PM on a Thursday night... who doesn't know you from Adam.

Having wrote that, S-Corps and bankruptcy can be particularly challenging (I had one, but I let it dissolve first). Are you personally filing? Is the corporation filing? Is this closely held (one one or two people)?

See... so many questions, and I can't really tell you what one would do over the other because there may be consequences that I haven't experienced.

[JRScott]

I wouldn't do it without as the others saying consulting a lawyer first. My gut tells me that you shouldn't do it. It would be considered and insider trade. However a lawyer in your district familiar with how the trustees there operate would be a better person to gauge the situation.

[howtoplan]

Thanks everyone...

This is a nightmare obviously and stressed beyond belief. I'm just looking for a bit of opinion. We are confident in our attorney, he handles businesses debt all the time. chapter 7 has been what two attorneys have recommended, which we consulted with very good references. We have already endured a 2.5 year civil case for the chapter S corp and are mentally exhausted trying to save a losing business. I just want to be able to recoup a bit of what invested. The other company is a C corp, which provides our living.

I do appreciate the past replies