Legal Question in Bankruptcy in Massachusetts

Selling of Assets

A friend of mine could be potentially filing for bankruptcy, however he wants to

sell equipment related to his business to his brother to take it over for a very

cheap amount. The ''debtor'' would be no longer involved in the business. Can he

simply fill out an invoice for the transfer of these goods before filing for

bankruptcy? Will the courts come after these items even though they were sold

prior to the filing?


Asked on 4/04/06, 8:07 pm

2 Answers from Attorneys
Barry Levine Law Office of Barry R. Levine

Re: Selling of Assets

Any sale of assets within one year of a bankruptcy filing needs to be disclosed. If you friend is going to contemplate a sale, it is necessary that the sale be for the current fair market value of the item. Before your friend embarks on any course of action, the assets being sold should be appraised. It could very well be that these assets would be exempt in your friend's chapter 7. In any event, nothing should be done until the consequences of any sale are completely and fully explored. I would be pleased to discuss this situation with your friend at a time of his/her convenience.

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Answered on 4/06/06, 10:07 am
David Baker Law Office of David Baker

Re: Selling of Assets

For anyone contemplating bankruptcy, it is almost certainly a >VERY< bad idea to think of transferring property, especially for a "very cheap amount". The bankruptcy trustee will almost certainly want to get the property back, and it is possible that because of the transfer, the debtor could be denied a discharge. I strongly recommend that the potential debtor talk to a >BANKRUPTCY< lawyer (not a general practitioner) before doing anything like this.

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Answered on 4/04/06, 8:17 pm


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