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Business Bankruptcy options
I purchased a business 10/08. It is a “C” corp. I have invested $74,000 of my money since then trying to keep it afloat. I have someone who will buy the business for pennies of what I paid for it. I can use that money to pay some debts. Do I then have the corp file bankruptcy? If so, what chapter since there will be no remaining assets?
Asked on May 8, 2009 under Bankruptcy Law, Virginia
Answers:
B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
There are too many things that go into this for a simple answer. You need to talk to an attorney who is experienced in small business law. You can look for a lawyer near you at our website: http://attorneypages.com
You haven't described the business at all. It is possible that the sale of the business may be covered by the Uniform Commercial Code's chapter on "Bulk Transfers," which is the term used for the sale of all or most of a business's assets outside the normal course of business. What you are required to do, as far as paying off the business debts, can vary quite a bit, depending on whether the Bulk Transfers law applies, and on how you conducted the business. It is possible that you won't need to put the corporation into bankruptcy at all.
Your business is a corporation, which in many cases means that you don't have to pay the business debts out of your own pocket, which lawyers refer to as "limited liability." The "C" status is mostly just for tax purposes, but the fact that you qualify for it means that you need to talk to a lawyer, to be sure you don't fall into one of the exceptions to limited liability. It's worth the cost, because doing this the wrong way can easily be a lot more expensive in the end.
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