Dear experts, I own a corporation in CA and I am the sole stockholder. My company filed Chapter 7 last year and I attended the 341 meeting already. I have not received any notice since the 341 meeting. I just checked the Bankruptcy court (central district) web and it indicated “Bankruptcy Case Closed – NODISCHARGE” in Jan this year already. My questions are: 1. Does this mean my company Bankruptcy Case approved? 2. I know the debts are not discharged, unlike personal Bankruptcy cases, but what benefits do I or my company get from this “Bankruptcy Case Closed – NODISCHARGE” ? Thanks a lot.
Real Estate Attorney
It sounds like you petition was not approved. You get no benefits. Did you have a lawyer? If not, get one next time.
I hope this answer is helpful.
My answer is just my thought about your question, and not legal advice because you and I do not have an attorney-client relationship, which may begin only if we both sign a retainer agreement. Other lawyers may analyse your situation differently. Also, the answer may be different in your state. Be aware that I may not be licensed in your state. I am only licensed in Washington and Idaho. Be aware that my areas of practice may not cover your question. I practice Debt Settlement, Business, Asset Protection, Tax Reduction, Contracts, Real Estate Transactions, IRS, 501(c)3, State Departments: Labor and Industries, Employment Security, Revenue, Licensing.
Corporations do not receive a discharge. Only individuals receive discharges.
Unless the Corp had assets to be distributed by the Trustee, no reason to file chapter seven for a Corp.
Leventhal Law Group
Chapter 7 Bankruptcy Attorney
Corporate chapter 7 bankruptcy cases rarely make sense. Creditors can now resume collection efforts and the corporate BK doesn't protect you from any personal liability that you might have to the corporate creditors.
Sometimes a corporate bankruptcy might make sense if you want a court supervised liquidation of assets prior to dissolving the company. Sometimes the psychological impact of a BK on the creditors might cause them to cease collection efforts. But without knowing more facts, I am not what benefit you received from the bankruptcy beyond the temporary benefit of the automatic stay.
First, the firm is a debt relief agency according to the U.S. Bankruptcy Code. We help people file for bankruptcy. We also do other stuff and we do it well, but Congress wants me to post this notice. Second, nothing on this site is legal advice. You are not my client unless you enter into a written agreement signed by you and me.
Why did you file BK for your corporation? What did you want to accomplish? Sounds like you did not have a lawyer advising you because, as you can tell from the other responses, a corporation BK makes little or no sense. When the trustee is finished with administering the case, it is closed without any discharge being entered. Sounds like your corporation case is over. Get ready for a resumption of collection efforts by the corporation creditors.
You are not my client and I am not your attorney. This advice is given in the spirit of the AVVO platform and is based on general legal principles. You become a client when you enter into a formal retainer agreement with me.
It means your creditors THINK that because the corporation filed, that there is no more debt owed (they are wrong..no discharge as you know) and that there are no more assets (wrong if there are but trustee did not liquidate them). You personally , absent personal liability, escape the hassle of having to deal with all those creditors. The creditors could bring you personally into court to find out what assets remain but that is pretty rare. If you want to start another similar type of work, make sure you incorporate and go at it again! Did you know Howard Hughes and Henry Ford both filed bankruptcy? You learn and move on. Make sure your taxing agencies know the corporation has ceased to do business assuming it has. If in fact there are asssets left and the corporation dissolves, you have the fiduciary duty to use those liquidated assets to pay creditors (you might be one for spending time to wind the business up also). Good luck.
The general purpose of filing a corporate chapter 7 is to slow down the liquidation process and allow for an orderly dissolution. Sometimes is used to stop a civil trial or stop a levy to temporarily protect assets to pay employees.
Once it is done you may get a benefit of your creditors thinking that they can't collect as my colleague mentioned. Other than that, there really is no benefit once it is closed.
If you personally guaranteed debts then the creditors may start to come after you as well.
Kevin A. Spainhour, Esq.
Chapter 13 Bankruptcy Attorney
Short answer is NONE. There are really no benefits to a Corporate Chapter 7 due to the fact that the Corporation can only get a discharge in a Chapter 11. What you should do is wrap up the business under state law and file a personal Chapter 7 do discharge any personal obligations you may have from the business. The only thing a Corporate Chapter 7 does is turn you company into a shell. It liquidates its assets and kills it. I do not usually recommend a Chapter 7 for Corporations. If you had a lawyer he should have gone over all of that with you. If you don't have a competent bankruptcy lawyer I suggest you get one.
Estate Planning Attorney
Really the only benefit of filing a Ch. 7 is to slow down collection, or halt a civil proceeding. If you really wanted a successful discharge in Bankruptcy, you should have filed for Chapter 11 relief, which requires a highly experienced Bankruptcy attorney. Best of luck to you!
I agree with all the other answers. How are you defining "approved"? What is it you contemplated as a benefit for filing a Chapter 7 case for your corporation?
It's a little odd that you're asking now what benefits you get from a Chapter 7 corporate case. One would think that's a question better asked PRIOR to filing.
Legal disclaimer: Mark J. Markus practices law in California only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation.
If the company had assets, the Trustee has finished liquidation. Without assets, then there was nothing to administer and the case was closed. If the latter, this means that creditors have nothing to pursue against the business and even though you do not get a discharge, you still get the effect of the court sending creditors- that there is nothing here to liquidate. If the company had assets, the Trustee may have finished liquidation, receiving claims and paying claims and filing a motion to get paid. Look on PACER to see which case type you have if you do not know.