Spending before filing

[diebroccoli]

I searched but could not find this info, so please post a link if its already available here.

What exactly can you spend money on before filing for CH7?

My situation is complicated because i have a business (LLC, 100% owner) that will continue to operate before, during,and after the BK filing. We are going to work out a buy back plan over 6-12 months that will allow me to "purchase" my inventory and supplies from the trustee.

My business has a daily cash std dev of up to 10k. meaning i have to have 10k of cash on hand to be safe. I am obviously going to let this dwindle down as my filing date approaches, but what types of things can i buy? Extra shipping supplies? Extra advertising? pre pay for some inventory orders?

I dont want to do anything that would constitute fraud, but then again i dont want to simply hand over 10k in cash on my filing date. I keep seeing posts and threads that you can "be smart about dwindling cash", but where is the line between being smart and committing fraud?

[tknj99]

Im sorta in the same situation as I have 4 rental properties that generate extra income now that im not paying on any of the mortages. When deductions for the maint fees are considered, I still have 2k per month left over. I have just been using the money on things that are ok to spend on - food/clothes/expenses, etc. I will also use the money to do some home repairs and now that I am selling one of the condos will use 20k of the proceeds to replace all windows/doors in my primary residence. So things like that should be ok to spend on. I am keeping receipts for everything.

[Trixie007]

If you have to "buy-back" inventory, anything you buy for the business, you would just have to buy again from the Trustee? This seems more complicated than just stocking up the pantry, so probably only your attorney can advise you properly on this issue.

[diebroccoli]

If you have to "buy-back" inventory, anything you buy for the business, you would just have to buy again from the Trustee? This seems more complicated than just stocking up the pantry, so probably only your attorney can advise you properly on this issue.

yes, but at liquidation pricing. i have a fairly specialized business that would be VERY difficult to liquidate and get any kind of value.

I am actually getting 2nd and 3rd opinions out in the real world, but i was hoping to use this forum to get even more opinions

[keepmine]

Time your filing around your quarterly tax filing dates is one way to eat up some cash in a hurry.
I'd not add to physcial inventory since, that would just mean you have more to buy back from the trustee-firesale price or not.
What about needed maintence or repairs to the business location?

[diebroccoli]

Time your filing around your quarterly tax filing dates is one way to eat up some cash in a hurry.
I'd not add to physcial inventory since, that would just mean you have more to buy back from the trustee-firesale price or not.
What about needed maintence or repairs to the business location?

Yes, spot on. We actually just replaced one of our major pieces of equipment as it was badly needed. Other than that, i was thinking of getting a redesign on our website and paying off all our back taxes for '08.

Talk about crazy timing though, my #1 competitor just sent me an email asking if we wanted to buy his inventory at liquidation prices, and that he was closing up shop by the end of the year. Man, I would love to scoop up his stock but i just dont see how i can right now.