I want to file Chapter 7 business bankruptcy for my corporation and liquidate the corporation. Will the corporation's taxes get discharged as well? Is there anything that might not get discharged which I should try to pay off first before I file for the business bankruptcy?
A corporation does not receive a discharge in Chapter 7 as it is not entitled as it is not an individual. If there are assets they will be liquidated by the Trustee to pay creditors. You should consult with a local attorney before you pay any debts off prior to filing Bankruptcy for your corporation.
Mr. Ravosa is correct. A corporation does not receive a discharge in a Ch. 7 bankruptcy.
There are some circumstances when, in a Ch. 11 case, a discharge is made part of the Chapter 11 Plan so that once the plan is confirmed and later performed and completed, a discharge may be issued on behalf of the corporation, and possibly some of its principals.
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Whoever is trying to convince you to file a business bankruptcy wants to take you for a ride. In a business bankruptcy, assets are sold at fire sale prices & a large part of the proceeds pay administrative expenses. Nothing gets discharged either. Hope this perspective helps.
No corporate discharge of any debts and no discharge for corporation tax liability.
There may be limited other reasons to take a corporation through chapter 7 bankruptcy, but you should talk with an experienced bankruptcy lawyer to get the full understanding before making any decisions.
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Rare is the circumstance where anyone "wants" to file Chapter 7 for a business. As pointed out by my colleagues, a corporation does not get a discharge of ANY of its debts including tax debts. If someone is telling you otherwise, they are seriously mistaken. If a lawyer is telling you that, you should ignore that advice. What do you think is gained by a Chapter 7 for the corporation?
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.
I, like all the others will tell you it is rare to file a Chapter 7 for a corporation. What you really need to be concerned about is YOUR potential liability for corporate debts, especially taxes that the corporation did not pay. You may also have guaranteed other debts of the corporation that will come after you. You need IMMEDIATE advice by a highly skilled bankruptcy attorney BEFORE you do anything with this corporation.
Do yourself a huge favor and see a quality bankruptcy attorney to find out what can be done for you and what is protected. Your case would be filed in the Bankruptcy Court in Sacramento. I would recommend you find a quality bankruptcy attorney by looking at Avvo's ratings for Sacramento attorneys.
You could also look at the CA State bar website for a Certified Bankruptcy Law Specialist in Sacramento. Most attorneys will give you are free initial consultation. I have provided a link to the state bar below.
Another potential source for finding a good attorney would be through a search of the National Association of Consumer Bankruptcy Attorneys (NACBA.org) to find a good local attorney. Again, I have provided a link below.
There is a new ratings website that ranks over 70 different "top rated Sacramento bankruptcy attorneys" using a number of different criteria. This website leaves a lot to be desired in looks, but it has a sort-able database that gives you 20+/- different options to sort the attorneys based on what you think are the most important. It apparently does not accept advertising from attorneys. I have included the link below.
No matter how good an attorney is rated, if you are not comfortable with the attorney when you meet, move on to another attorney. Also, if the attorney uses a paralegal to do the initial appointment, move on because you are just a number and a dollar sign. If this is how you are treated when they are trying to get your money, you can be certain it is not going to get better after they get your money.
Do NOT use an attorney that does anything other than bankruptcy law, foreclosure or debt negotiation. Part-time bankruptcy attorneys are, sadly, almost never expert enough to do the job right. This is a specialized field and you should go with an attorney who practices solely in that specialty. Never hire to veterinarian's assistant to do brain surgery on you and never hire a non-specialist to do a specialists job. Get the right attorney to begin with.
I hope this helps you.
This response does not constitute legal advice nor is the attorney providing this advice in any way liable for the providing of this information. It is provided for general information only. No attorney client relationship in made by the answering of this question. Any reader of this response is recommended to seek the advice of a competent attorney in your area.
Filing a Chapter 7 bankruptcy for your corporation will not discharge your obligation to pay the debts of the corporation which you personally guaranteed. (and with a small corporation I have found that most lenders to the corporation require that the owner of the corporation personally guarantee the debt.) You need to talk to a good bankruptcy attorney to devise the best bankruptcy strategy for both you and the corporation.
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