Legal Question in Bankruptcy in North Carolina

Because this is a Subchapter S corporation, that means that you are taxed as an individual with a K-1 issued to you and sent to the IRS to report gains and losses. You know that, but for those others reading this answer it is important. For tax liability purposes, both state and federal, your accountant and lawyer will be able to structure some final disposition. (sale, liquidation, receivership, just walk away or bankruptcy) You can sell anything that a person is willing to buy. The ownership of a corporation is represented by stock. Just like GM you can sell your shares in GM to anyone who wants to buy them. Of course, if the liabilities exceed the assets, then the stock may have no value and no market. If there is some asset, such as a patent, or exclusive agency agreement, lease with favorable terms or other potential money maker, then a person may be interested in buying the liabilities along with the asset. You must be careful to vet the buyer, and consult a business lawyer very early. A corporation can file bankruptcy. In a Chapter 7, unencumbered and assets held free and clear would be sold by the trustee. If any cash remained after the liquidation, then the stockholders are distributed the surplus. Of course, this is exceedingly rare because the corporation can liquidate under state law without paying a trustee to do so. In a Chapter 11, the business can continue under a restructure, dealing with creditors on an equitable basis, or could be liquidated by the principals. (Called an "orderly liquidation" Chapter 11) A business lawyer can guide a corporation through this process.