Legal Question in Bankruptcy in North Carolina

Re: Corporate Bankruptcy

If YOU are filing bankruptcy, I would suggest that you seriously not consider taking anything. Your stock may not be worth anything and the trustee may be willing to work out a deal on repayment of the loan, but if you get "stuff" that you can't claim as exempt the trustee will take it. Also, any transaction for less than fair market value would be subject to being set aside.

If the Corp. is filing Ch. 7, I would first ask why? A corporation gets no discharge, so except for purposes of recovering preferential transfers to creditors so that distribution can be made to priority creditors such as taxes (which may assessed against responsible parties), it generally makes no sense to file Ch. 7. But if the corp. does, any payment to you on the loan within 1 year of filing will be recoverable back by the trustee as a preference. Also, your shareholder distributions are likely to be treated as fraudulent unless you can establish that the corp. was solvent when made and that they were made out of surplus.

Before you do ANYTHING, seek competent business bankruptcy counsel.

Daniel Press

Chung & Press, P.C.

6723 Whittier Ave., Suite 302