Howdy pokerpro,
First, a reminder of the "Important Disclaimer: Answers and
comments provided on Google Answers are general information,
and are not intended to substitute for informed professional
medical, psychiatric, psychological, tax, legal, investment,
accounting, or other professional advice."
The Moran Law Group website has some excellent information
on all of your issues on their "Bankruptcy in Brief" pages.
http://www.moranlaw.com/
"Explore this site for background on bankruptcy issues.
There are over 150 pages of questions and answers, procedure,
explanations and links to other resources."
You can do a few things, but what we are talking about is
liquidating the business. This can be done done through a
bankruptcy procedure, or by just ceasing operations. Here
is the Moran Law Group page that can help you decide.
Bankruptcy or not
http://www.moranlaw.net/failing-startup.htm
"There is no clear or universal answer to whether a failed
business should file a Chapter 7, which is a liquidation
proceeding. It depends on the value and nature of the
assets; the attitudes of creditors; and the availability of
management to oversee the process.
Companies can go out of business without filing bankruptcy:
they liquidate their assets and cease operations. Creditors
have a right to recover their claims from the assets of the
corporation. If there are no assets, the corporation cannot
be further harmed by lawsuits that try to collect from the
corporation."
You are not stuck with going just one way, as is further
stated.
"This choice is not necessarily an either/or decision.
Management can liquidate assets as far as feasible, and
file bankruptcy thereafter to let the trustee mop up."
There are pros and cons on either route on the above page,
so you should review it detail. The above page also has
some great tips on just how to wind down a business as well.
Some basic about filing Chapter 7 bankruptcy.
http://www.moranlaw.net/chapter7.htm
"Chapter 7 bankruptcy is a liquidation proceeding in which
the debtor's non-exempt assets, if any, are sold by the Chapter
7 trustee and the proceeds distributed to creditors according
to the priorities established in the Code.
...
The case is begun by filing the official petition, schedules
and statement of financial affairs. These forms prompt you to
list all of your assets and all of your debts, along with some
recent financial history. This is the most important and most
time consuming part of a bankruptcy filing."
Again, much more detail which should be totally reviewed is
given on the page above.
The unasked question at this point is whether you can or should
attempt doing the Chapter 7 procedure "pro per" or representing
yourself. This Moran Law Group "Bankruptcy in Brief" web page
addresses just this question.
Can I file bankruptcy without a lawyer?
http://www.moranlaw.net/proper.htm
"On the other hand, a truly simple Chapter 7 is something that
you can do for yourself, if you are diligent about gathering the
information, preparing it carefully, and following through on
details."
Some potential downfalls of doing it yourself are outlined here.
http://www.moranlaw.net/pro-per-mistakes.htm
"The bankruptcy paperwork looks simple on its face. Individuals
are tempted to do it themselves either assuming that they can't
afford a lawyer or that they don't have anything to lose."
As for the shareholders being liable for the corporation's debt,
http://www.moranlaw.net/shareholderliability.htm
"Simply owning the stock in a corporation does not make the
individuals liable for the corporation's debt. The shareholders
may, however, become liable for the debts of the corporation
either by agreement or by operation of law."
Again, you should go to the above page and read it in detail
as it outlines under what conditions, and what types of debt
that the shareholders might be liable to cover. Some examples
appear here, as part of the liquidation process outline.
http://www.moranlaw.net/failing-startup.htm
"Check real property and equipment leases, credit cards, and
trade accounts where the contract may be in the name of an
individual or an individual has guaranteed the debt."
To summarize, if you have the energy and motivation to do so,
you could at least begin the liquidation process yourself,
and then either finish it yourself through a cessation of
operations, or by filing Chapter 7, depending on cooperation
from your creditors, etc.
If you do go the Chapter 7 route, and you can scrape up some
money, it might behoove you to schedule a preliminary meeting
with a bankruptcy attorney as well.
If you need any clarification, feel free to ask.
Search Strategy:
Prior reference to the Moran Law Group website.
Google search on: "S corporation" bankruptcy
://www.google.com/search?q=%22S+corporation%22+bankruptcy
Looking Forward, denco-ga |
