Perspective on Bankruptcy bill
Books on bankruptcy
Bankruptcy in Brief
a service of the Moran Law Group
Why bankrupt a corporation?
Good question! Since corporations don't get discharges, when does it make sense to file bankruptcy as opposed to simply closing the doors, liquidating the assets, and allowing the state to terminate the corporate existence?
In our view, there are only a couple of situations when it is advantageous to file a Chapter 7 for a corporation:
- When a creditor is poised to lien or levy on assets that could be used to pay debts for which the shareholders or officers are personally liable, such as trust fund taxes or leases or other obligations that are personally guaranteed.
- When the services of a trustee are desirable to preside over the liquidation of assets and the winding up of the business, freeing the corporation's officers to seek employment, etc.
- When filing bankruptcy may discourage creditor suits which have a tendency to name the officers and shareholders personally, irregardless of whether they are legally liable for the debt.
Extended discussion of the pros and cons of liquidating in bankruptcy, on your own, or some of each.
02/16/03