My husband recently passed away and had an S-corporation. Now, his sister is suing the corporation for a loan she gave. I have consulted with a bankruptcy lawyer and a corporate lawyer. the bankruptcy lawyer says to pay the creditors pro-rata and let the corporation die. the corporate attorney says to file for dissolution. I just want to get this over with personally and do not want to be held personally liable for anything to do with my husband's business. can you help?
Filing for dissolution because not just the assets but the liabilities must be distributed. That probably means debt distributed to you.
Bankruptcy is "nice" but linquidating bankruptcies don't result in a "discharge in bankruptcy" for the entity.
You could consider letting a defult be taken if the assets are far less than the amount of the loan.
All of the above is fact specific and anlysis, not legal advice. How one accomplishes negotiting a default and other issues is what hiring an attorney with experience is all about.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
Mr. Doland has given you good advice. I don't understand why you are asking these questions on AVVO. Your communications with your current attorneys are subject to attorney-client privilege and your communications on AVVO are not. In addition you are seeking more legal opinons which should make your task even more confusing . Have your current corporate attorney discuss the matter with you current bankruptcy attorney and have them provide you with a joint recommendation.
Hope this helps.
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If the assets are wor less than the liabilities then there is nothing leftover for you and unless you yourself were also an officer or director (which creates certain duties to creditors) then I would consider walking away and doing nothing and let one of the creditors force the entity into bankruptcy and let others sort it out amongst themselves as to what is fair for all concerned. You have no duties to invest your own time and money to make a bankrupt company wind down easily for all but yourself. Is called a walkaway....let the creditors beg you to assist if they need your help but have them pay for your time and pay all legal fees if you were to agree to provide such assistance. Obviously I do not have all the benefit of facts in your situation so I am recommending you go back to the 2 lawyers you already hired and ask them why my suggestion is a bad idea.....this will perhaps help you reach a logical next step.
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