my c corp business was formed with help from Benetrends utilizing my 401K as well as personal guarantees. Going under; what to do? Personal guarantee applies to back-rent, equipment, supplies, etc. Own my home, not "underwater" on it & would like to keep it. Don't know what is the correct course to take. Help?
Answer
Well, how not underwater is it? Is there any equity? I mean, yes, we know there must be, but how much? As long as the equity in the house does not exceed what you are legally entitled to exempt (translation = keep), you could keep the house, file a Chapter 7 bankruptcy which would take care of all the personal guarantees (which sound substantial) and be in much better shape. Again, that depends on the amount of equity in the house, and other things such as income and expenses.
Feel free to give me a ring and I can discuss it further.
Todd Mannis, Esq.
Tel: (818) 591-9890
Calabasas, California
Answer
One possibility is dissolving the corporation and assuming all the debts of the corporation and then filing a Chapter 7 personally to wipe out everything. However, whether or not you can file a Chapter 7 depends on whether you can keep all your property and that depends on the amount of property you own after liens on the property and income/expenses. All that requires an experienced bankruptcy attorney to represent you. I am assuming you want to close the business because you cannot operate a business in Chapter 7 unless it is a self employment low risk occupation involving no employees. If you have a business then a personal Chapter 13 may be the option. Again, consult with an attorney locally.
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