Alright, another issue for you experts to tackle!

[trader19]

Ok guys... have a new one for you... need some advice. before my income went to crap in a matter of seconds... i also started a horse racing business. it is an LLC with 2 members.... me and my very good friend. this company has operated since jan of 2011. it was/is a serious business. we have been in the RED since the beginning. i have never taken a penny out.... only contributed to it. my friend has financed most of it. he has made loans to the business and we have paid him back with revenue. for instance... he loaned the business 10k to buy a horse... loaned another 5k to pay bills... then the horse wins 11k... he would be re-payed that amount on the loan to the business. keep in mind, this is loan to the business, NOT to me. so i don't think the BUSINESS paying back a loan to him should be considered a preferential payment from me, right? even though outside of the business he would be an insider... but inside the business, he is a creditor to the business. and i have 100% documentation that he loaned this money to the business. so, me going bankrupt shouldn't mean my business is going bankrupt. and the business should be allowed to pays its creditors. is my logic correct?

which brings me to my second point. as of right now... my partner has contributed 24k more to the business than i have. even though our business only has one horse and will be closing up shop quickly... would i be allowed to make a 12k payment into the LLC name and have the business cut him a check for 12k? that way, both partners contributed the same to the business to even out our contributions. we are listed as 50/50 partners on our formation documents. might seem a little shady, but i am wondering what exactly the problem would be? i kinda look at it like this... my 12k payment to the MY business is not an insider payment... and the 12k payment from the business to him is a legitimate repayment of a loan. our balance sheets would now match. opinions?

[HHM]

On issue (1), the business paying the loan to partner out of revenue...non-issue. It is new money coming into the business from the "operation" of the business.

However, you have other issues and problems.

Second, payment of $12K, I disagree with your characterization that a payment into the business is NOT an insider payment...it is. See BK Code Section 101(31) Insider...includes (A)(iv) corporation (also LLC) of which the debtor is a director, officer, or person in control. It is still an insider payment if your transfer cash to a business in which you have substantial interest or control. It is simply a non-starter.
Issue 3, where are you getting this $12k
Issue 4, the business is an asset in your BK. As such, if this horse has actual value, you are (and the BK trustee) is entitled to the value of that half interest. If you just walk away from the business without receiving value for that interest or (accounting) for it in some way, the trustee can go get the horse.

That doesn't mean there are no options, but it is time to get an attorney that is familiar with how business interests and BK function. But whatever you do, DO NOT pay $12K over to the business, that would be bad.

[trader19]

ok... so what about this scenario...

lets say me and a partner have a rental property that is underwater on the mortgage by alot. however, the monthly profit after paying mortgage/taxes/expenses is $2000 month. could my partner loan the LLC $24,000 to do repairs on the house. keep in mind, even with these repairs (which need to be done) would still not bring the value of the house to even equity. so, the trustee would still not want it. and then have the LLC pay my partner the full $2000/month in profit to pay back the loan for one year leading up until a possible BK a year from now. under that circumstance, i would have no income for a year as the LLC is paying off the $24k loan. and also, nothing to take cause the value is still not worth taking. would that fly?

[HHM]

Get an attorney, and be prepared to pay about $3000-$6000+ for your BK.

Bottom line, YOU are not paying back this partner until AFTER your BK. Period. There is no fancy accounting that can be used to make this work.

This (new fact) you introduced still doesn't help you...it makes things even worse.

If you really want some help, I think you need to be a bit more forth coming. If you keep adding new facts and scenarios, it is not helpful. Why does this $24K number keep popping up. Did the partner actually put $24K to the horse business or not, if so, why would the partner put in an additional $24K to the house. And then you pay back $12K. Your facts aren't adding up. Please be more forth coming and provide a more complete "picture." Why is it so important for you to get the partner $12K or $24K back "prior" to the BK?

[Drazil65]

Your wheels are turning and there is alot of creative acccounting being thrown around. What exactly is your goal? Why all the workarounds? I do not mean anything by this but I have to ask because it appears that you are putting alot of effort in skirting some issue and that is a red flag. If it takes that much effort to work around an issue to conceal the direct path then it appears like you are hiding or trying to hide something (sorry for being so direct but I have to ask). Are you trying to hide the filing from your partner(s)? Are they(he) insisting you pay him(them) no matter what you do about filing? Just trying to sort out the details and make sense of all these deals and "things" you have going on. Thank you and please do not be offended by my directness.

[trader19]

i am sorry guys.... i am trying to learn how this all works. my example was more of a curiosity. i should have explained it before my last post. the $24k was just used as an example since it was easily divided by 12 months. the truth is... my partner did just contribute $5000 for necessary repairs. we have new tenants moving in this week. i used such a high number in my example because if your input said that was ok... then i would be sure the business paying back my partner $5000 would be okay too.

[HHM]

One of the First rules of this forum is, NO HYPOTHETICALS (not sure it is actually stated), as you can see, presenting things in hypothetical doesn't help. Since the situation is false, it is too easy to keep adding changes and those changes change the advice.

Just give us the real facts, with your real concerns, and then we might be able to help? The "dollar" amount is not the issue.

It really is easier if you just say. I have 2 LLC's, each owned 50/50 by me and a partner. It is the same partner in both LLC's. And then go on and tell us what the concern is and what happened.