Corporation goes bankrupt...
 

if your a owner in a corporation that files for bankruptcy does your credit get screwed also????

Your personal credit stays out of the equation, unless you were required to make a personal guarantee on anything.

Depends... LLC, INC, LLLC or what... also depends on other factors...:2 cents:

Only on things you personally guaranteed for the corporation. Like if you got a visa card for the company and you gave your info as personal guarantor. If the company goes belly up you are liable for that debt.

The other way you could be liable for corporate debts is if you acted negligently and your negligence caused the company to fail.

Not true... "officers of the company" can be held liable in certain states. :2 cents:

Exactly .. see above.

for specific conditions such as negligence

for the part most your credit isnt touched unless they try to pierce the corporate.

Closed Corporation.

it's a family run business and my parents are buying out the third party and giving his portion of shares to me....so they are asking me to sign the corporate papers...

Not always true Buster... some states require owners as operators to be "culpable". You can be non-negligent and still responsible. Depends on the state.

Tony, you are also right. "Piercing" the corporate "veil" is quite difficult, and most courts frown upon it.

I'm sure their are other conditions such as defective products, etc. but if you did everything by the book and ran the corporation properly I can't see you be personally liable for a corporation's debt. If you were what would be the point of forming a corp in that state?

so i'm pretty much safe from any liabilities of the corporation, and the corporation is safe from any of my personal liabilities? what i'm trying to make sure of is that if someone goes after me personally they won't be able to touch my family's corporation, and if something happens to the corporation they won't be able to go after me....

another thing is my LLC is an adult business and if i ever run into any problems i don't want people or government to be able to go after my families corporation....keep in mind they have no idea i make some of my money in adult.

I'm no legal expert, and I would advise you find one. There is no such thing as a "closed corporation".

You parents will not be able to assign the third party shares unless they are majority owners. Additionally the "third party" where are they?

two-thirds of the business is owned by our family, the third partner has also already agreed to sell his shares so that my family will own 100% of the business and he will just work for us....

i understand your not a legal expert, but i'm just poking around right now before making any type of decision...i've studied business law in college so sort of know how things work, thing is my family says everything should be "okay", i guess they consulted their lawyers already.

and they said they need to to give them an answer within 3 days because they need to "renew" the corporation.

another thing is i know that the shareholder's credit history affects the credit of the corporation and the ability for the corporation to get loans...so i was wondering if it was vice versa...

You may want to make them advised of the idea you make "some money in adult".

As I said before, don't ever do anything without COMPETENT COUNSEL (which you won't find here). You can buy in to the family buisness and still be safe from contamination if you are holding other companies. Doesn't matter if they are LLC's or INC's or LLL'cs.

This is the time where spending some $$ on a kick ass laywer will reward yo 10 times in the future... IMHO.

Yeah... but 2/3 is how much? How much is the 1/3 the non owner is giving up? It's quite complicated.

He's willing to sell his 1/3 and "work" for YOU and US? Right... get counsel.... please.

So who's thinking of filing for bankruptcy, you or the corporation?

he's on the payroll already..so he'll just continue to be on the payroll, and not own part of the business. From what my family said he is in need of money right now so has offered to sell his ownership....i actually have nothing to do with the day to day running of the corporation..i actually have nothing to do with the corporation at all :1orglaugh !!!

I'm basically a shareholder on paper and that's it. Even if I do get some of the shares I will have nothing to do with the business.

well...i guess i gotta call my lawyer tommorrow....here goes some of my cash to legal fees....

LOL...no one actually...we are both pretty well off..but i'm just thinking worse case scenario

Your ownership in the corporation is an asset to you. If you are sued personally you could be forced to sell this asset to pay off any judgements against you.

Ask a real fucking lawyer !

what's primary reason why some corp as been bankrupts ???

Correct... get professional advice Shaze.

There are other issues, but assume you are not going to be an officer of the corp? If you are, definately seek more legal advice :winkwink:

NO. Unless the creditors sue you and "pierce the corporate veil." ONE OF THE MAIN REASONS why the legal concept of corporations was created was to protect entrepreneurs' personal assets from loss arising from their business ventures.

How to pierce the corporate veil?

1) The corporation is weakly capitalized (ie., your corp doesn't have enough cash in it's own account to cover its operating expenses)

2) The corporation is an ALTER EGO of the shareholder -- ie., personal funds in corporate account, corporate assets used for personal reasons, etc

3) Disregarding corporate form -- ie., you don't hold annual shareholder meetings, no minutes, no separate corporate forms, etc etc.

What happens when the corporate veil is pierced successfully? Your personal assets are used to pay creditors for losses arising from corporate activities and your credit gets FUCKED accordingly :(