Business owners in Ohio who are experiencing financial difficulties have likely explored their options under the protection of the U.S. Bankruptcy Code. Those who want to continue operating their business while reorganizing their debts can file a Chapter 11 bankruptcy. However, if all business operations must cease, Chapter 7 will discharge most debts and liquidate assets to pay creditors. As soon as a bankruptcy filing is recorded, an automatic stay will put a halt on any legal actions already started against the business owner.
A wine supplying company owner in another state is seeking such protecting for his business that apparently has liabilities of approximately $70 million and assets of only $7 million. There are currently four pending fraud lawsuits against the company, and if the Chapter 7 bankruptcy petition is successful, these claims will be cancelled. However, the bankruptcy trustee is investigating the company to determine what happened to the funds that were paid by customers for wines that were never delivered.
The trustee wants to examine the company’s computer to determine whether the bankruptcy petitioner committed unlawful conduct or abuse. If any evidence of fraud comes to light during this investigation, the company may lose corporate protections under the U.S. Bankruptcy Code. In such a case, the owner of the company may become personally liable for the company debts.
Ohio business owners who are considering their options to resolve financial problems may benefit from a consultation with an experienced bankruptcy attorney before taking action. Not being fully informed may lead to decisions that may jeopardize personal and business financial stability, but a lawyer can explain the pros and cons of personal and business bankruptcy filings. Taking this advice will allow the business owner to make informed decisions that may put him or her in the strongest possible financial position at the conclusion if the bankruptcy process.
Source: dailycal.org, “Owner of Berkeley wine store ordered to turn over computer in bankruptcy hearing“, Jessica Lynn, Feb. 2, 2016