Legal Question in Bankruptcy in Pennsylvania

My husband and I have a S corporation and would like to file bankruptcy on it, how does this affect us personally?

Asked on 7/27/15, 5:14 am

1 Answer from Attorneys

Matthew Nahrgang Nahrgang & Associates, P.C.

Whenever I am asked about filing bankruptcy for a corporation, I often note there is no need to file a chapter 7 bankruptcy for a corporation, if all that is sought is closing the business. Rather, the owners can simply close and file an Out of Existence Affidavit with the Department of State, or dissolve the corporation with the Department of State. But neither of those is required.

There are 3 reasons for a corporation to file a 7 bankruptcy: 1) the corp has assets that the owners prefer be the subject of an orderly liquidation for the benefit of creditors; 2) the corp has assets and the owners want them sold in bankruptcy so that priority debt such as sales taxes for which the owners are responsible persons under tax codes and held liable, will be paid before other threatening general unsecured debt. 3) the corp operates out of the owners� home and they want creditors to leave them alone by declaring the business has not assets.

If the goal is to stop creditors and operate the business, a chapter 11 is the only method. That costs thousands of dollars in attorney�s fees and, by its very nature, is harmful to the business generally. You must speak to experienced bankruptcy counsel about the likelihood of success and whether it is indeed a viable option.

Read more
Answered on 7/27/15, 8:21 am

Related Questions & Answers

More Bankruptcy Law questions and answers in Pennsylvania