I am a partner in an incorporated business and I want to file corporate bankruptcy, what if my partner refuses to file?

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I am a partner in an incorporated business and I want to file corporate bankruptcy, what if my partner refuses to file?

My business partner (50-50 partner) refuses to file corporate bankruptcy and insists that I pay her half of the remaining debt, close to $10,000 which is financially impossible for me. What are my options?

Asked on October 28, 2010 under Bankruptcy Law, California

Answers:

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

Whether a given officer can file a bankruptcy for a corporation depends on the corporation's bylaws and state corporation's law.  This isn't really a bankruptcy question.  A certain percentage of the board of directors must vote to authorize the corporation to file for a bankruptcy case.  If you and your partner are the only members of the board of directors, it may be impossible for there to be a quorum, but that would need to be defined in the corporation's bylaws.

Did you want to file a bankruptcy to keep the corporation in business, or to liquidate its assets and go out of business?  If the latter, you should know that corporations do not receive discharges of debts in such Chapter 7 cases.   What this really comes down to is what you're trying to accomplish and why.  Bankruptcy for the corporation may not be the answer anyway. 

For more information on corporate bankruptcies, please visit http://www.bklaw.com/business_bankruptcy.html

 

 

Mark J. Markus, Attorney at Law
http://www.bklaw.com/ 

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 10 years ago | Contributor

Whether a given officer can file a bankruptcy for a corporation depends on the corporation's bylaws and state corporation's law.  This isn't really a bankruptcy question.  A certain percentage of the board of directors must vote to authorize the corporation to file for a bankruptcy case.  If you and your partner are the only members of the board of directors, it may be impossible for there to be a quorum, but that would need to be defined in the corporation's bylaws.

Did you want to file a bankruptcy to keep the corporation in business, or to liquidate its assets and go out of business?  If the latter, you should know that corporations do not receive discharges of debts in such Chapter 7 cases.   What this really comes down to is what you're trying to accomplish and why.  Bankruptcy for the corporation may not be the answer anyway. 

For more information on corporate bankruptcies, please visit http://www.bklaw.com/business_bankruptcy.html

 

 

Mark J. Markus, Attorney at Law
http://www.bklaw.com/ 


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