Corporate Chapter 7 transfers to shareholder
Posted: Wed Jan 25, 2012 10:24 pm
Thank you Mark, you are absolutely right of course. The problem, as you know, is that sometimes debtors are concerned about the delay of waiting and buying it from the trustee. This guy claims he needs the equipment immediately. But I am going to press him, as I do prefer your scenario.
I litigated this issue once with a Riverside Trustee, but we never got into detailed briefing. So I never found much case law, but I am sure you are correct there is no bright line, and I am probably being unrealistic in even finding a case which discusses the various criteria. I thank you for the reply!
>
> You're doing it in the wrong order. If the PC wants to purchase
> corporate assets, the corporation should file Chapter 7 FIRST and
> then purchase the assets from the Trustee (and PC and corp. should
> NOT be represented by the same attorney). This helps shield the PC
> from insider dealing and allegations of the assets being sold for
> less than FMV.
>
> As for your other questions, the more distance the PC can put
> himself/herself/itself from the current corp, the better. Different
> business name. Different owners. Different location (if feasible),
> etc. I'm not sure there's a bright line test for successor
> liability, but I'll let others opine on that.
>
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> On 1/23/2012 4:37 PM, frank1014 wrote:
> > PC would like to buy out some equipment from his corporation at fair market value, then put company in to chapter 7, with intent to set up a similar business. I am telling him there is osme risk, but if he gets a couple of good appraisals to support the purchase, will probably withstand Ch. 7 Trustee scrutiny. However, I was looking for case law about relevant criteria, and particularly what other red flags there are to the trustee, when shareholder tries to continue business: ----such as avoiding the same leased location, use of defuct debtor's phone number, website address, etc. I know some of the red flags, but:
> >
> > I cannot find a case which readlly discusses this question. ??
> >
> > Anyone aware of a useful decision? Thanks. And Thanks to Jonathan Hayes for an excellent presentation on Saturday!
> >
> >
> >
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