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  1. #1
    Join Date
    Jul 2017
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    Default How Does Chapter 7 Bankruptcy Affect Money Judgements

    My question involves bankruptcy in the state of: California
    Our company was going under for lack of monies to keep running. We sold off to a larger Corporation in same business to help us pay off outstanding debt. All assets, employees, leases, name where given to this Corporation in legal contract.(they assume no past debts or liabilities in contract) We where still short probably $300 to $400k to pay debt. We consulted with BK attorney and advised us to check if debts where secured or unsecured. We figured out which debts were secured by ourselves and paid them off. (Loan to company secured with UCC lien, Company credit cards and large vendor secured). It has now been over a year as Attorney told us to wait. We only have unsecured debt mostly with one or two vendors in amount of $300,000, which is now taking the Corporation to court for judgement. We only have $30,000 in account left.

    Question is why do BK on Corporation if just a judgement and creditors will seize bank account. Wouldn't this save money and nothing can happen since nothing left?

    Second part-If do BK route- Can any creditor that gets a judgement jump in first place on my UCC lien and make my personal loan to company invalid? This is assuming if we do BK route after a company has received a judgement.

    Thanks

  2. #2
    Join Date
    Sep 2005
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    Default Re: How Does Chapter 7 Bankruptcy Affect Money Judgements

    If the corporation held assets sufficient to secure six figures in debt, it seems unlikely that the only asset a creditor could pursue is its remaining cash. You should discuss the facts with your lawyer.

    If you are stating that you are an unsecured creditor of your business, if the business files for bankruptcy you will make a claim for that money along with the other unsecured creditors, and the court will sort out the priority of the debt. Your lawyer can advise you as to the details, which we do not have.

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