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turningitaround

I'm feeling so overwhelmed... trying to figure some things out...

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I have been considering bankruptcy.    I have a great amount of personal debt (around $40k).    I was used to making a good living with my business for many years and I spent beyond my cash thinking it would "come back."   Well, it hasn't.    

On top of that $40k, my business partner and I have personally guaranteed loans for our corporation.     The corporation is NOT making money and has no real assets.  No inventory.  Ran very lean and is in the red.   We aren't making a salary at this point,  just reimbursing some expenses.   Can't even afford payroll for ourselves right now.

My concern is, we don't want to close the corporation as we're working on turning it around.    But this noose of debt is really affecting my mental health and focus.   

Has anyone filed BK with shares in a corporation?   What happened?   I'm so worried - I don't want someone coming in and running the business with my Partner (nor does she).   I've had some scary feedback from an attorney (although he didn't see our books and how badly the Balance Sheet looks).

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I have a great amount of personal debt (around $40k). . . On top of that $40k, my business partner and I have personally guaranteed loans for our corporation.

So, how much is the total debt, including all personal guarantees?  Remember, each of you is 100% responsible for those obligations so tell us the entire amount not half of it.

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The corporation is NOT making money and has no real assets. No inventory. Ran very lean and is in the red. We aren't making a salary at this point, just reimbursing some expenses. Can't even afford payroll for ourselves right now.

Sounds like it is time to walk away from the business. But. . .

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we don't want to close the corporation as we're working on turning it around. But this noose of debt is really affecting my mental health and focus.

Sounds like trying to turn it around is the wrong choice. Many small business owners think there is a light at the end of the tunnel just to find that the tunnel never ends. Think about it.

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Has anyone filed BK with shares in a corporation?

Yes. . . done all the time.

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I don't want someone coming in and running the business with my Partner (nor does she).

If you are really worried about this, and depending upon how much you owe, including the guarantees, you would look at a Chapter 13. In a Chapter 13 the debtor keeps all of his/her property by agreeing to pay the non-exempt value to the creditors over the course of the Plan.

In a Chapter 7, the Trustee will step into your shoes and become the owner of your stock. The Trustee is not going to run the business with your partner. That is not his/her job. Instead, after investigating the finances of the business, the Trustee may put your shares of stock up for sale. Before he does this, however, he may offer to sell the shares either to you or to your partner. You can elect not to play the Trustee’s game. If you are sure that no one (but the two of you) would buy your shares, calling the Trustee’s bluff might force his/her hand to abandon the "asset" (the worthless stock).

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I've had some scary feedback from an attorney

Then meet with many others. I cannot tell you how many cases my Firm has filed where the debtor had a business. Happens too many times. An informed decision is made between the attny and the client as to which Chapter works best.

Des.

 

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