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What owners and officers need to know
When business isn't going well and management is evaluating survival strategies and contingencies for closing, consider the the following:
The division of debt between secured and unsecured guides what reorganization can do for the business.
Is this debt secured?
Misuse of the the proceeds of a secured creditor's collateral can create a non dischargeable debt for the individuals involved.
When an employer deducts taxes and social security contributions from employee wages, the employer becomes a fiduciary for that money which belongs to the employee. "Loaning" the business the money due Uncle Sam from employees' paychecks makes the responsible corporate officers personally liable for the trust fund taxes not paid to the taxing authority.
Sales taxes are trust fund taxes in some jurisdictions, as well.
No longer liable to ownership, corporate officers owe duties to creditors when a corporation becomes insolvent.
Repayments to relatives and business decision-makers on their claims against the debtor can be recovered by the bankruptcy trustee under certain circumstances as preferences.
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1/16/06