That is likely a fraudulent transfer. A fraudulent transfer is a transfer of an asset for little or no value and the trustee in a Chapter 7 can undo that transfer and go after the asset (business). Do not transfer anything prior to filing bankruptcy you risk losing your discharge of any or all of your debts and you also risk losing assets as well. Speak with an attorney and do not transfer anything. If there is a significant asset that is at risk you file a Chapter 13 to protect that asset.
Also when you file a Chapter 7 bankruptcy a trustee can pierce the corporate veil because you are the shareholders in the corporation so this is an issue you need to speak with an experienced bankruptcy attorney about. The lookback period for a fraudulent transfer is 4 years or longer. Again don't transfer anything. Trustees are looking for that kind of stuff and you are risking not only a stiff fine but possibly jail time if you lie about it, and you risk not discharging any of your debts. A trustee will almost certainly catch a transfer of business because you have tax returns out there filed for the corporation. The trustee sees those tax returns and in addition the bankruptcy papers ask if you transferred or sold any property in the last two years, and if you have owned or operated a business. If you don't fill them out and answer them correctly it is a perfect perjury trap! An inexperienced attorney who doesn't understand or regularly practice bankruptcy may think something like this is fine, but any attorney who is experienced and knows what they are doing will certainly advise you against this. Even if you did get advice to transfer stuff from an unscrupulous attorney or a "dumb" one, you are going to be in world of pain by doing it.
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The transfer of a valuable asset without payment is a fraudulent transfer. If the transfer occurs within one year prior to the filing of the bankruptcy, your debt forgiveness may be denied. If the transfer occurs within 2 years prior to the bankruptcy, the trustee may sue your daughters for return of the asset. If the transfer is within 4 years of the bankruptcy, the trustee may use Florida law to sue your daughters. Do not be without hope. Alterntatives to the fraudulent transfer are available. You should consult with competent counsel.
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I agree with the prior answers. Transferring an asset can create a serious problem for you as to any bankruptcy. An attorney should be consulted an examine issues such as the value of the business including whether the corporation has any debt.
The questions and answers posted on AVVO are for general information and should not be treated as legal advice or establishing an attorney-client relationship.
Do not make any transfers until you speak to a bankruptcy attorney. It may not even be necessary to transfer anything.
First, anything that is transferred out of your name without it being an actual sale for value, is considered a fraudulent transfer. That means the bankruptcy trustee could undo the transfer and get to the assets. The trustee can look back two years under the bankruptcy rules and up to four years under Florida law. If you sell the restaurant to someone for a fair price, that's fine but the trustee will ask what happened to the money.
Second, if the restaurant is not truly an asset, it may not be a problem. If the Corporation owns all of the restaurant assets, those assets are not considered your personal assets. You own the shares of stock of the corporation. If the corporation's liabilities are greater than the value of the assets, the shares of stock are worthless. This has to be carefully calculated and may require the help of a CPA.
I have filed many bankruptcies for small business owners that did not affect their business.
It can be done, but must be done carefully.
Eric Bolves. 407-894-1002. www.thelegalcenter.com
2110 E. Robinson St.
Orlando, FL 32803
If you are in my practice area, call me for a free phone consultation. 407-894-1002. Answering a question on this website does not create an attorney-client relationship. I'm not officially your lawyer until we have had a one on one conversation and you have signed a retainer agreement. I practice bankruptcy in Orlando only. I practice Social Security Disability law throughout the State of Florida. Offices 2110 E. Robinson St. Orlando, FL 32803.
Your son was here on Avvo not that long ago. I urged him then, and I urge you now, that you need to consult with an attorney, face to face and go through every facet of your financial situation. Your son had 3 questions posted, and here is yours. The answers you get here on Avvo may be helpful, but they are general responses at best. From what I can ascertain, you still haven't met with an attorney who can make specific recommendations based upon the specific factors with which you are involved.
I realize I might not be making friends here, but surely enough is enough--get with a Miami-Dade or Broward lawyer to get advise based on your facts. So, with all due respect, stop flailing around hoping to get an answer that you will like, which I note from your son's questions and now yours, you have not yet gotten, and based upon the facts you are not likely to get. You may have to make a choice of a number of strategies, and none of them are going to be pretty.
I hope you found this response to be of assistance. This response shall not be considered the rendering of legal advise but instead a general response to a general question. While Avvo is a wonderful resource, nothing can be a substitute for an in-depth consultation with an attorney in the jurisdiction in which the law is to be applied. This response shall not be deemed to create an attorney-client relationship, nor shall it create an obligation on the part of the attorney to respond to further inquiry from the questioner.
It's a fraudulent conveyance if you don't receive adequate consideration in return meaning that you've lowered your net worth. It's likely not a good idea to transfer to someone prior to filing. You certainly will have to disclose it and such a transfer will likely cause the trustee to "claw it back" into the estate.
And I agree - talk to an attorney.