QUESTION
What would happen if an individual sells their business and then later files for chapter 7 bankruptcy?
Asked on Jul 14th, 2011 on Bankruptcy - Mississippi
More details to this question:
What would happen to a deal in which an individual is selling their business (land, building, and all assets) to another individual and the seller later files for Chapter 7 bankruptcy?
6 ANSWERS
Bankruptcy Attorney serving Herndon, VA
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Maureen O'Malley
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Depends on the reason for the sale, to whom, the reasonableness of the price, etc. If the sale is to keep assets from creditors or the trustee you bring a lot of trouble on yourself.
Answered on Jul 19th, 2011 at 11:19 AM
Glen Edward Ashman
That depends on the terms and timing of the sales paperwork and Chapter 7, which no one here has read.
Answered on Jul 19th, 2011 at 10:06 AM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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When a bankruptcy is filed all assets are part of the estate owned by the trustee subject to exemptions. Proceeds of a sale of assets would belong to the trustee. The trustee might want to set aside the sale if it is a voidable transfer. This is a complicated matter and attorney advice should be sought.
Answered on Jul 19th, 2011 at 10:05 AM
Bankruptcy Decision Attorney serving San Diego, CA
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Law Office of Daniel G. Shay
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The transfer of assets would need to be listed on the Schedule of Financial affairs if within the time period and exempt. If not, The Trustee can undo the transaction and take the money for the creditors.
Answered on Jul 18th, 2011 at 2:51 PM
Debtor's Rights Attorney serving Atlanta, GA
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Theodore N. Stapleton, P.C.
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There should not be a problem as long as the sale was an arms length transaction in which the purchaser paid fair market value for the assets.
Answered on Jul 18th, 2011 at 2:27 PM
Samuel Lee Tucker
The trustee would probably inquire what became of the proceeds of the sale. Perfectly legal to convert non exempt assets to exempt assets.
Answered on Jul 18th, 2011 at 2:09 PM