Business Bankruptcy Simplified

Feb 10th, 2014 | By | Category: Info

There is a padlock on the delivery gate. Most of the manufactured pre-cast products formerly stored on pallets in the back lot are gone. The building has a huge’ For Lease’ sign fixed to the front. Janelle, the former owner, drives by in a Rent-a-Lemon car. She had registered both her automobile and delivery truck in the behalf of her business; and, like everything else she had worked for years to build up, they’re gone.

Consider when purchasing a private business, if the business has lease. Determine if the lease allows a new owner to acquire the business, will the lease be renewed for new ownership, and what are the penalties for breaking the lease. Examine whether the business location has sufficient space for expansion or relocating to provide more space. New franchise owner is restricted to transfer the business to another location, without fringing upon an area, were an existing franchise location, already exist or prohibited by the franchise corporation.

How did it all happen? She had run this business successfully for over twenty years. When events turned sour, everything happened at once. First, a powerful and wealthy client sued her for almost a half-million dollars. Then, other clients, sensing the distress, started using one of her competitors. Her financial problems soon followed. Eventually she could not make payroll, so she decided to file business bankruptcy.

quit claim business for bankruptcy?
I own a business that is a partnership. My partner is filing for bankruptcy with her husband. she wants to quit claim to get her name off the business. my husband and I dont like the idea and we want to quit claim so our name is off the business and they could add the business to their bankruptcy. We absolutely do not want anything to do with them and their bankruptcy. Does this seem like a good idea? We have been trying to sell the business so we really want to get out.

  • Your partner wants to give you her share… right that means you would be sole owner. If the business is in debt I would talk to a financial professional. If the business is making a profit and you can show that, then what is the problem when it comes to selling? Just give it away if it is such a burden to own? If the business is in trouble financially maybe you need to recognize your mistakes and count your cost. Learn from it and move on. Trying to evade financial obligations by bankruptcy or just not paying will only cause you more headache in the long run.. People who escape from having to live with the consequences of their actions repeat their mistakes… Something to think about.

  • Neither of you should quit claim the business, what your partner should do in her bankruptcy is list the fact the business is an asset and the trustee will want to sell it. You will be entitled to your share of the proceeds even if the trustee sells it as you are a joint owner. You just want to make sure your partner deals with it properly in the bankruptcy (which may involve you hiring your own attorney). Keep in mind, any partnership debts will be discharged on her end. That is typically why both partners end up filing bankruptcy, but if you can handle not filing, that's great, you just should not be transferring property before she files bankruptcy as that will look like fraud. There is a 5 year look back period and I doubt your partner wants to wait over 5 years to file. Now, if you bought her share for fair market value and she disclosed it, that MIGHT not be a problem, or you two can try and get it sold prior to the filing (again for FAIR MARKET VALUE). But otherwise, I would just let the trustee decide if it is worth liquidating and then make sure the trustee is aware of your ownership interest (and thus your share of the funds from the sale).

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