corporate bankruptcy - small business - chapter 7

[rwk]

Hello, I am new to this forum. Most of the messages seem to be about personal bankruptcy. I have questions about a corporate bankruptcy (Ch. 7) of a small business. Is this the appropriate forum for these questions? If not, can you direct me to the appropriate place?

[keepsmiling]

Welcome to the fourm.
Ask away.

[rwk]

forgotten assets post ch.7

So, several years ago a small corporation went through chapter 7 bankruptcy. I have the documentation of this from D&B and PACER. However, some strange things persist. I don't want to get too specific here, but an asset exists under the corporation's ownership. At the time of bankruptcy, the asset was not considered property - it is an intellectual asset, long forgotten about by the corporation. Now, my question is: What is the status of this asset? If the corporation is dissolved and all assets sold to pay its debts, anything remaining is distributed to the owners - am I correct? But, what if there was a shortfall in the liquidation of the assets. I mean, after everything was sold, the money paid to the creditors did not meet the amount they were owed. If this unrealized asset now has a value, would there be another court procedure to liquidate this new asset and pay the creditors? With the asset's existence, was the corporation dissolved properly, meaning it still exists? Or, would this asset now be property of the owners of the corporation, and the creditors due nothing? What makes this more interesting is that the corporation is still listed as active in the state's database - I would think that it would be marked as not active, dissolved, etc.

I realize there are lots of questions in here, and I may need a good lawyer to straighten it out. But, if at least some of these can be answered I'd go to the lawyer in a better position.

[HHM]

First, we do not appreciate or tolerate hypothetical's. So, let's start with...which side of the fence are you on in this situation? Are you a former shareholder of the company, were you are creditor, etc.

Was the asset simply forgotten at time of fling and not listed, or was forgotten because at the time it was thought to be inconsequential (although it is still an asst and "should" have been listed).

Or was the ownership of this asset "concealed" from the BK?

Also, how many years have passed since the entry of the discharge order.

To answer your "general" question, for the most part, the value of assets is "set" at the time the debtor filed BK. So, if this asset had little or no value at the time of the company's bankruptcy filing, no problem. No one really cares. Further, the bankruptcy cut's off "future" claims. The bankruptcy is a wrapping up of the business. Once the bankruptcy is closed, (absent active concealment of a valuable asset, e.g. fraud), the case is over, the company is toast, and any remaining "token" assets are returned to the company, and can be distributed accordingly. Distributed accordingly can be mess if there are multiple shareholders.

The status of the company at the secretary states office is irrelevant.

Whether you should seek a lawyer depends on your goal. But it sounds like you probably should.

[rwk]

First, we do not appreciate or tolerate hypothetical's.

Ouch..I didn't mean to offend or annoy.

So, let's start with...which side of the fence are you on in this situation? Are you a former shareholder of the company, were you are creditor, etc.

None of these. I am someone who found the asset and who wishes to put it to use.

Was the asset simply forgotten at time of fling and not listed, or was forgotten because at the time it was thought to be inconsequential (although it is still an asst and "should" have been listed).

Or was the ownership of this asset "concealed" from the BK?

At the time of the 2005 proceedings, the asset was not commonly recognized as such. I do not believe any malfeasance was intended.

Also, how many years have passed since the entry of the discharge order.

Almost seven.

To answer your "general" question, for the most part, the value of assets is "set" at the time the debtor filed BK. So, if this asset had little or no value at the time of the company's bankruptcy filing, no problem. No one really cares. Further, the bankruptcy cut's off "future" claims. The bankruptcy is a wrapping up of the business. Once the bankruptcy is closed, (absent active concealment of a valuable asset, e.g. fraud), the case is over, the company is toast, and any remaining "token" assets are returned to the company, and can be distributed accordingly. Distributed accordingly can be mess if there are multiple shareholders.

The status of the company at the secretary states office is irrelevant.

OK, so I need to contact the owner. There appears to be only one, from all the documentation I have been able to gather.

Thank you for your answers.

[HHM]

Basically yes, your first step would be to contact the owner.