|Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net|
But what can happen is the owner and LLC are so close to being a single entity that the owner fails to recognize he or she is not the direct owner of the company's assets. On the eve of a sheriff's sale, the owner files for bankruptcy protection to prevent the sale of the property. Unfortunately, bankruptcy will probably not stop the sale. The owner cannot protect the LLC's property by filing for personal bankruptcy.
While this may seem obvious to some, this was an actual case discussed at a session in a recent bankruptcy conference I attended. One of the panelist was a creditor's attorney executing on a judgment. The owner filed for bankruptcy to protect the LLC's real property from a sheriff's sale the day before the sale. The property was sold the next day at the sale.
If a business owner is dealing with debt and bankruptcy seems to be an option, he or she must fully understand the ownership of the property at risk. And ownership may be more complex than anyone realizes. Failure to fully understand ownership could result in an unsuccessful bankruptcy.
If you want assistance, legal representation, or just want to know more about Mark Medvesky or our firm of Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.
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