New Jersey  |  Bankruptcy

Legal Question

Asked on: 8/20/09, 11:49 am

What is the scenario in an ABC or a Chapter 7 Bankruptcy, when a shareholder of the company that is dissolving, is also a creditor of the company?

Providing the transactions are arms length, does the shareholders’ other company have equal priority with other unsecured creditors in order to collect the debt that is owed?

For example:

The shareholder has an LLC, which owns real estate. The LLC rented the real estate to the dissolving corporation. Can the LLC collect the back rent from the debtor, which he is also a shareholder?

Does this shareholders’ LLC have the same lawful priority as the other creditors that are owed?

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