Posted on: 14th Dec, 2009 02:59 pm
My father is angry with me now because he said that he cannot believe I would think he would ask me to do something fraudulent. He said that this is not fraudulent, and explained it further to me. He said that he is not transferring his business into my name prior to his bankruptcy, but rather closing his business altogether (letting govt seize it during bankruptcy?) and then opening a new one under my name, and then three mos. later buying it from me for $1. I then asked him, "Then, dad, why can't you just wait three months after the bankruptcy and open the business in your own name?" He said because he will lose all his current customers that he intends on servicing in the new business. If he is doing that, is that okay to close your business during bankruptcy and then start a new one after bankruptcy in someone else's name, even though you're servicing the same clients you serviced in your old business, and then put it in your own name three months later, buying it back from them for $1? Please help. I'm completely confused.
i understand his reasoning that in 3 months' time his customers will bail out and find someone else to provide whatever it is he provides at this time. i am quite certain that what he is proposing isn't something new and novel, but that plenty of others have done the same thing. is it legal? i don't know, but it sure smells. you obviously also believe that it smells. it makes sense to ask this question of a lawyer steeped in bankruptcy knowledge.
you ought to be nervous, because if this turns out to be illegal, then you're in it, because it's family.
you ought to be nervous, because if this turns out to be illegal, then you're in it, because it's family.
an aside: his anger seems terribly misplaced. he's asking you to do something that certainly smacks of illegality, even though you may find out that it's legal.
you're protecting yourself, and asking questions that you're not exactly getting straight answers to. and he is angry? seems more like a personality disorder.
you're protecting yourself, and asking questions that you're not exactly getting straight answers to. and he is angry? seems more like a personality disorder.
Welcome emailamethyst,
It is true that transferring business just before bankruptcy would be considered as a fraudulent act by the trustee and may penalize your father for it. It is better to let the trustee sell off the business during the bankruptcy in order to pay off the creditors. Once the bankruptcy is discharged, you and your father can start a business in your name and then after sometime the business can be transferred in his name. However, before taking any further decision of starting a business in your name, I would suggest your father to consult an attorney in this regard.
It is true that transferring business just before bankruptcy would be considered as a fraudulent act by the trustee and may penalize your father for it. It is better to let the trustee sell off the business during the bankruptcy in order to pay off the creditors. Once the bankruptcy is discharged, you and your father can start a business in your name and then after sometime the business can be transferred in his name. However, before taking any further decision of starting a business in your name, I would suggest your father to consult an attorney in this regard.
