Legal Question in Bankruptcy in New Jersey

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?

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

1 Answer from Attorneys

Robert Davies The Davies Law Firm, P.A.

There are a lot of things that go into this. It might be possible to have the LLC paid before the other creditors, but I would need to know a lot more about this to give you any answer.

You really need to sit down with a lawyer, since there is a fair amount of money at risk.

Please give me a call. The telephone discussion will be free of charge, and I will let you know what I believe I can do to assist you further.

My contact information can be obtained from the links below, just click on the Attorney Profile link. Let my secretary know you found me through LawGuru.

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Answered on 8/25/09, 2:16 pm

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