More details to this question:
My son owns (and has owned for 14 yrs.) a dive bar in Tempe, AZ. The bar assets (consisting of the Liquor License and contents of the bar; he does not own the building) are fully paid for but the bar is now, over the past 3 years, losing money creating a financial burnout on him as an individual.. He has racked up personal debt as a result, maxing out all his credit cards and losing any credit rating he had built up. My son is considering filing personal bankruptcy but he has the bar as an S-Corp. Does a personal chapter 7 Bankruptcy need to implicate the S-Corp? Or can he file his Chapter 7 & leave the paid for assets of the Bar as an S Corp untouched?
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Bankruptcy Attorney serving Burbank, CA
Partner at
Law Office of Mark J. Markus
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When a Chapter 7 case is filed, the bankruptcy trustee becomes the owner--at least temporarily--of everything the party filing the Chapter 7 case (the "debtor") owns. Your son presumably owns 100% of the S-Corp. That interest would be an asset of his Chapter 7 bankruptcy estate. Whether the corporate assets would therefore be at risk depends on their value, and what exemptions he has under applicable law relating to his case. For more on exemptions see https://www.bklaw.com/bankruptcy-exemptions.
Answered on Apr 25th, 2019 at 10:09 PM