The client runs a decent sized construction operation. Revenues in excess of a quarter million per year.
But he has no accounting system. He just takes his bank statements, receipts and chicken scratch notes to the tax man once a year to crank out a tax return.
No monthly bank account reconciliations.
No computerized records.
COVID-19 is a wrecking ball destroying small Nebraska businesses, but at some point the medical crisis will end and the debt crisis will take off.
So far the damage has been mitigated by programs such as the Paycheck Protection Plan, but business revenues have dropped dramatically and consumer spending is not likely to return
It has never been more dangerous for business owners to file Chapter 7 bankruptcy in Nebraska.
New rules now require that business owners prepare special valuation reports to provide more information about the assets of their business. Chapter 7 Trustees have the power to sell unprotected assets, and they are demanding special reports showing the
Business owners filing Chapter 7 beware! You may have to close your business until the Chapter 7 Trustee surrenders any claim to it.
That is the nightmare that potentially awaits unincorporated business owners who file Chapter 7. Why is that? And why does this only happen to unincorporated business owners?
The problem occurs because the
The writing is on the wall and your company must close. Despite throwing everything you had into making the business successful, it’s not working. The funding is depleted. You have drained all your personal resources, emptied the retirement nest egg, mortgaged the home and you are out of cash. You have talked to all the
I still remember being in the bankruptcy meeting room waiting for my client’s turn to see the Chapter 7 Trustee. What I saw was a classic mistake made by young and inexperienced bankruptcy attorneys.
Trustee: So how long have you owned the painting supply business?
Debtor: About 8 years.
Trustee: I see that you rent
Whether a business is incorporated or not can have a dramatic impact on the outcome of a bankruptcy case, especially in Chapter 7 cases where the bankruptcy trustee has the power to sell non-exempt assets. Successfully filing a business bankruptcy in Nebraska depends on understanding the important difference between incorporated and unincorporated business assets.
Let’s
I had coffee with a great friend of mine who began his own bankruptcy practice a few years ago. He explained that he recently acquired a very difficult case involving a debtor with a high paying job and he expected a brutal Chapter 13 confirmation process—i.e, he expected the Trustee to demand a significant monthly
Frequently I meet with small business owners who own companies that have become so burdened with debt that I describe the corporation as being “toxic.” Even if business improves and cash flow increases, the corporate entity is so weighted down by bank liens, court judgments, and tax debt, it can never recover. The business may