S corp bankruptcy

[s2mason]

I have a s corp with 2 shareholders with each having a 50% vested interest in the corporation. My question is can one shareholder file bankruptcy without the knowledge of the other shareholder?

[justbroke]

You could file personal bankruptcy, sure. The Trustee may or may not seek to sell your interest in the S-Corp. Best to get an attorney who is good with personal bankruptcy filings for individuals that are self-employed or own ownership in a corporation.

[frogger]

can one shareholder file bankruptcy without the knowledge of the other shareholder?

It's possible, but unlikely.

You need to be honest with the other shareholder in the corporation and give them heads up of what's coming.

[despritfreya]

You need to look at the corporate bylaws to determine what rights each shareholder has and whether or not there must be a "meeting" between the shareholders to authorize the filing.

As frogger points out, you need to be honest with the other shareholder. Unless the entity is going to file a Chapter 11 to attempt to reorganize, why on earth would the entity file a bk? The entity will not get a discharge in a Chapter 7. The only thing that will happen is a Trustee will step in, shut the business down and begin liquidating assets. The Trustee may even go after the shareholders (that includes you) if it can be shown that either "raided the corporate coffers".

I highly recommend that you discuss all options not only with the other shareholder but also with a qualified bk attny.

Des.

[SunshineGal]

Hi s2Mason,

I assume your talking about a personal BK and not a business...correct? If so, I think you'll have a problem keeping it from your partner. The statement of affairs asks questions about businesses in the last 6 years and you'll have to turn over tax returns and probably financial documents for the business as well.