Will Trustee take my Business??

[carlsbadmike]

My attorney said that I had to dissolve my service business in combination with doing my personal CH7. I only had a few computers as assets, a/p that exceeded my a/r, no employees and without me there would have been no future business/income. I had to provide profit and loss statements for the last 4 months and business tax returns for the last 2 years which were looked at by the BK trustee. When the trustee asked about the business, my attorney told her that we were winding it down and then there were no further questions about it. On this site I have read that it is necessary to dissolve a business(including service businesses)when filing personal BK, which concurred with my attorneys advice. Why is it not necessary in some service business situations without inventories?

[msm859]

My attorney said that I had to dissolve my service business in combination with doing my personal CH7. I only had a few computers as assets, a/p that exceeded my a/r, no employees and without me there would have been no future business/income. I had to provide profit and loss statements for the last 4 months and business tax returns for the last 2 years which were looked at by the BK trustee. When the trustee asked about the business, my attorney told her that we were winding it down and then there were no further questions about it. On this site I have read that it is necessary to dissolve a business(including service businesses)when filing personal BK, which concurred with my attorneys advice. Why is it not necessary in some service business situations without inventories?

Well I can say in CA I did not have to dissolve my personal service business. My attorney told me theoretically the Trustee could try to close it down and lay off my 1 employee, then we would have to file a motion to abandon. He could not sell my business - as people come to "me". He initially asked for $5k to abandon and I paid $2500 which means he got $625 and my creditors make a claim for the rest (which all will go to the IRS as a priority creditor). In some ways it was extortion since the business did not really have any blue sky value. However, if you can make the Trustee happy for $625.00 and insure no other issues it was worth it - total costs of BK $995 atty fees + $299 filing fee + $625 make trustee happy fee = discharge of $200k + = good business decision.

[magua2]

My attorney said that I had to dissolve my service business in combination with doing my personal CH7. I only had a few computers as assets, a/p that exceeded my a/r, no employees and without me there would have been no future business/income.

This doesn't make any sense. If your business has no assets or your business debt exceeds your business assets, the trustee will likely abandon your LLC or S-corp. Were you operating as a sole-proprietor without a separate business entity? Even if you were, I don't see the reason why a person would have to dissolve his company. The trustee's job is to make money for your creditors, not to ruin your business if there is no financial reward for doing so. Only if your business has a value is it worth the trustee's time to liquidate your company. Someone please enlighten me.

[carlsbadmike]

My business was a failing S-Corp. that I no longer wanted to operate. My attorney advised me that this was the best way to handle my situation. There are pro's and con's on this website regarding this matter so I guess it varies on a case by case basis, attorney's advice, etc...

[keepsmiling]

I'm with Magua....baffled. (bear with me here, I just learned how to do smilies and need to get it out of my system)
What is the point of dissolving the business? Is this only if your a/p exceeds your a/r?

Might they tell my sole prop dh he has to get out of the law biz??? Not that he wouldn't love to, but what then?

[carlsbadmike]

Taken from: http://www.lexpertise.net/node/1581 When a business fails, anyone with a financial interest could have a potential claim on the failed entity including investors, lenders, trade creditors, employees, suppliers, customers, and the government (e.g. the IRS or state taxing authority). If those interests and claims are not properly addressed during the wind down process, the officers, directors and stockholders could be held personally liable long after the business entity ceases to exist. How you treat each of the affected persons is critical to successfully shutting down a business. From the moment you first decide that failure is a possibility, it is important to take control of the process and work with legal counsel as well as tax and accounting professionals to properly address the issues.

Doing a crash and burn by leaving the business open was not an option, for me. Some people may handle the situation differently. This is what I was advised to do.

Perhaps I should have posted my response as part of another posting instead of this one(will trustee take my business). I am only relating how and why my case was handled this way