Creditors coming after the corporation

[mtngirl47]

We filed Chapter 13 personal on 4/14 and included all the corporate credit cards that we personally guaranteed. No bank EVER gave our C Corp credit, they always wanted our SS#.

Discover Business called on Friday to say that they were going to pursue collections against the corporation because I signed as a corporate officer. Another bank called today, same story. I asked them if they were going to make a claim in the bankruptcy and they said no, as long as our company was in business then they would try to collect.

I feel like this is just the beginning of about $70k in debt that I was hoping would go away in the 13. Plus...will our plan payment go down if all these folks don't make claims?

So now what? I understand that once the 13 is confirmed that we will not be personally liable, but what should we do about the company? We can't dissolve the corporation with existing debt. If we file Chapt. 7 the corporation is over.

The business is a tourist lodging business...in business under this name for over 30 years (we're the 3rd owners)...advertising all over the place, road sign, etc. The DBA thing sounds tricky legally.

The corporation owns very little...computers, lawn mowers--our lawyer valued it at $10k because the trustee has to see some value. The property and buildings are mortgaged to us personally and we rent it to the corporation.

Any ideas or suggestions appreciated.

[BigJohn]

I would say close the business and start a new business as a DBA.

[frogger]

Start another corporation.

[mtngirl47]

Ok--So I'll start a new corp....but should I do Chapt 7 for the old one? Plus, since the new corp will be the same corp officers, etc--and the dba will be the same name--won't the creditors come after the new corp?

[frogger]

Check with your attorney to see if they think you need to 7 the corp. We did, for several reasons.

As to coming after the new corp? Nope. It will be a new, clean corporation without the baggage.

[HHM]

Normally in these scenarios, you need to dissolve the corporate entity to prevent this very thing from happening.

However, it is not simply a matter of "just" shutting down the corporation. It has to be done properly to prevent fraud claims. Since there are some assets, they need to be "sold" to yourself, real money needs to change hands etc. However, that is going to be a problem now that you are in an active chapter 13.

[fireworks]

Our lawyer advised us to BK our LLC for similar reasons. We had a lot invested in the business name and intend to continue doing some business under that name. For legal reasons, the LLC was dissolved in bankruptcy and no longer exists. I'm waiting until the official discharge (next week, I hope!) to start paperwork on the new business.

[frogger]

Our lawyer advised us to BK our LLC for similar reasons.

Same here. We bk'd our corp.

[LeslieF]

mtn girl: i have not filed yet but went back and forth on the 7 or 13 thing. i have decided without a doubt that 7 is best. one of the main reasons is that a 13 is intended for a business that has a viable future and a 7 is better if the future of the business is uncertain. with the economy the way it is i just cannot wish, hope and pray that sales in my retail store will start to increase again because the recession is so uncertain. i am closing completely but also know that in the future, if it is *right* i can still use my dba and reopen under a different corporate entity. i can also bring my retail store front 'home' and go completely on line with home delivery in my area etc with customers by appointment. i am lucky though that what i sell in my retail store really lends itself to a home business and yours may not. hope this helps!

[myid4u2c]

I was advised by my attorney that there is no reason to file on a corporation unless there are assets. It does not seam that your corporation has any real value other than the name. A corporation can not receive a discharge so it really does not make sense. Now for the dissolving the corporation with debt, this is much simpler than you would think. Be sure your payroll and sales taxes are paid and resign as an officer of the corporation and walk away. Most states will dissolve the corporation through administrative procedures after a few years.

[RuthCB]

I was advised by my attorney that there is no reason to file on a corporation unless there are assets. It does not seam that your corporation has any real value other than the name. A corporation can not receive a discharge so it really does not make sense. Now for the dissolving the corporation with debt, this is much simpler than you would think. Be sure your payroll and sales taxes are paid and resign as an officer of the corporation and walk away. Most states will dissolve the corporation through administrative procedures after a few years.

That is what I was advised as well. Do a Chapter 7 personally, name any creditors of the business in the personal Chapter 7 even if the collateral on the Line of Credit was the assets of the business. Dissolve the S-Corp.
My S-Corp has no assets.. In fact the biggest liability it has is loan I made personally to the business ( I'll never get it back!)

[mtngirl47]

Thanks for all the advice....I'm waiting to hear from my lawyer. This is the first time he didn't call me right back--so I'm anxious. In the Chapter 13 we listed the corporation as having a $10k value -- lawn mowers, golf carts, computers. So my concern is how will the trustee look at this asset. And we don't have any cash to "buy" the assets from ourselves.

Also, we have to operate this business as a lodging business and we definitely want to do business with the name we have. (We would sell--but not for what we want with the economy like it is...and commercial property is a dime a dozen right now.) Plus, for liability & personal protection we will need to set up a corporation.

Discover called again this morning--I asked them to fax me my signature as a corporate officer. We'll see what that brings. The other bank that contacted me is First National Bank of Omaha--and they were the first "company" credit card we got, about 10 years ago and I know for a fact that they based it on our personal credit. I haven't heard from BofA or my local bank yet.