Bankruptcy Question

[Daniel101369]

Company A is a nightclub that has filed for Chapter 7 bankruptcy. Company B is a LLC that is owned and managed by the owners of Company A. Company B receives money (bribes?) from liquor and beer companies so Company A will sell their products. Is the money (bribes?) received by Company B considered an asset (either directly or by proxy) for Company A as Company A only sells their product as a result of Company B receiving money under the table? Also, Company A is listing Company B as a creditor on their bankruptcy documents for hundreds of thousands of dollars. To me this doesn't sound right. Thoughts?

[justbroke]

Welcome to BKForum.

Reads like a law school (Business Organizations) question!

You didn't say if Company A was an LLC, so I'll just assume that is the case. LLC B would be a creditor because I'm guessing that LLC A owes LLC B money? In a bankruptcy, you list all your creditors. If they kept the business entities operating totally separate, then they are separate entities and not just an alter ego. Unless you're saying that Company A is not an LLC and is the alter ego of LLC B (a/k/a doing business as). If they are LLC B doing business as Company A, then A would not be a creditor. See the difference?

If LLC B loaned money to LLC A, then LLC A would be a creditor in that scenario as well.

Even if LLC A is benefiting from alleged bribes to LLC B, regardless of the ownership of either, that income isn't imputed into LLC A. It's a separate entity and if its books are clean, then it is clean.

What's the real problem here? Are you a creditor of Company (LLC) A? Are you worried about being diluted from any distribution to the general unsecured creditor pool from the liquidation of Company A's assets? If so, then you should get an attorney (either way). If you're going to file a claim then it's nice to know if your claim is subject to any priority that would put your claim ahead of others.

That's my understanding and is by no means legal advice. The only thing I would say that if you're a creditor then file a claim. I can't tell you if the allegations against LLC B are worth your time. If those LLC B allegations are true, then it would be up to government regulators to go after the business (LLC B) for violating any statute or licensing requirements. Even with your hypothetical, it's the alcohol distributor that may have violated statute... and not LLC B... but I'm no attorney and certainly no expert in the specific area of commercial practice related to alcohol sales.

Other than despritfreya , I don't know of any BKForum member who would even take a gander at your question. It's complex and is generally outside the scope of what is mostly personal and small-business bankruptcy. I have some multi-business experience and I know that someone who has organized their business correctly, will have few problems between the businesses themselves.

[despritfreya]

If Company A filed Chapter 7 it is out of business.

If you think Company B owes $ to Company A but Company A did not list this receivable as an asset, you can contact the Chapter 7 Trustee. Just be careful. You may think you know what is up but what you know may or may not be correct. It will be up to the Trustee to decide if your "accusations" have any merit or are just coming from a disgruntled employee (or other disgruntled family member or creditor). If you have verifiable proof of wrongdoing, get your ducks in a row before you reach out to the Trustee.

Des.