LLC Assets

[tah]

I have a mattress store and need to file a personal Chapter 7.

The store is an LLC based in Virginia and I am the only manager/member.

If the BK Court were to seize and try to sell my inventory they would be taking away my ONLY source of income which is currently paying my child support, mortgage, car payment, etc....important stuff!

Do they really want to completely take me down with no source of income or should my lawyer ask or do something extra?

I wouldn't think the court would want to do this to me, but you never know.

EDIT: I should add that the store is generating just enough income to pay my necessary living costs and I have been off the plastic for almost six months.

[frogger]

I have a mattress store and need to file a personal Chapter 7.

The store is an LLC based in Virginia and I am the only manager/member.

If the BK Court were to seize and try to sell my inventory they would be taking away my ONLY source of income which is currently paying my child support, mortgage, car payment, etc....important stuff!

Important to you perhaps, but not the bk court who will be following the laws

Do they really want to completely take me down with no source of income or should my lawyer ask or do something extra?

I wouldn't think the court would want to do this to me, but you never know.

The court does not want to "take you down", but they will want to use your asset (the LLC) to pay your creditors. Your lacking another source of income is not relevant to the filing of a chapter 7 bk

EDIT: I should add that the store is generating just enough income to pay my necessary living costs and I have been off the plastic for almost six months.

Have you stopped living off of the plastic? If not, do so a.s.a.p.

You need to have a bk lawyer that is familiar with small business/LLC bankruptcies. Do not use an attorney that is a bk mill, find one that knows the law. You will probably have a chance to buy back your LLC from the trustee at a good price.

Good luck.

[tah]

Here's what I found after Googling for about an hour. This makes sense to me and I think it's the way things are. I'm can't attach a link to the site as I don't have the required posts yet.

For those filing personal bankruptcy in Virginia who own a corporation, the business is protected. The two are separate entities.

YMMV as well as YSMV (your state may vary), for example I found that this won't hold up in Colorado. There have been BK court cases there where LLC property has been ruled to be the same as personal property when the filer is the sole manager/member.

[frogger]

Your corporation and you are two separate entities. That I agree with.

However, the corporation is your asset. That is going to be your problem. Once again, find competent legal counsel for your situation.

[tah]

Your corporation and you are two separate entities. That I agree with.

However, the corporation is your asset. That is going to be your problem. Once again, find competent legal counsel for your situation.

Spoke with a local Attorney and he said that he's never seen a business (LLC or other) liquidated by the court because of personal bankruptcy. He went on to state that creditors can "go after" the LLC because it's considered an asset. The trick is to make it look as unappealing as possible to those creditors.

He went on to state that the creditors who went after businesses were 99.9% of the time those who had extended PERSONAL credit to the business or LLC owner for business purposes. Ex: Line of business credit with a personal guarantee. This would be a case of them knowing what you have and where it is.

All my debt is personal CC's and I haven't used them for over six months. The LLC is run on a cash basis. All inventory is paid COD and there are absolutely NO lines of credit tied to the LLC.

Don't want to celebrate too early, but I think I'm going to be OK (business wise!).

[frogger]

Spoke with a local Attorney and he said that he's never seen a business (LLC or other) liquidated by the court because of personal bankruptcy. He went on to state that creditors can "go after" the LLC because it's considered an asset. The trick is to make it look as unappealing as possible to those creditors.


Don't want to celebrate too early, but I think I'm going to be OK (business wise!).

You don't need to worry about making it unappealing to creditors, you need to have your ducks in a row to plan for the trustee to review it. If your corporation has any assets, any cash, any accounts receiveables, any inventory, all are subject to the power of the trustee.

Liquidation is not the answer to the business unless it is worth more in parts than as a whole. The trustee will be looking for a quick/easy sale of the corporation. You are the most obvious buyer, so be prepared to buy the asset back from the bk estate.

Be prepared to submit several years of tax returns, bank statements, profit/loss statements, etc. to the trustee for him/her to review. The trustee will be especially interested in your depreciation schedule, for that is a gold mine of assets.

And no, don't start celebrating. Plan instead....

[Feelbad]

I have an LLC that is a service business with no inventory. I was at a point where the only asset was about $2,500 in the LLC bank account. The trustee did take the $2,500. My attorney told me that 3 out of 4 trustees would have ignore the amount but luck of the draw left me with one that would take it. I would plan on the trustee looking at your inventory as an asset and coming after it. I would also have the least amount of inventory on hand the day of filing. I would ask my attorney to give me some type of estimate on what the trustee might require in cash in trade for keeping the inventory. The trustee wont want to sell your product but does get a cut of the cash, so there is incentive for them to both come after the asset, and settle for cash.

[BigJohn]

You might consider Chapter 13.

[lillymarlene]

You might consider Chapter 13.

I agree.

I had the choice of either a 13 or a 7 and I chose the 13. I hope to be able to keep and build back my small business, too. At my age, pushing 60, jobs are not that easy to come by.