Can Shareholders File For Bankruptcy?
Remember, I say this and I’m not an attorney.
Shareholders in a company can file for bankruptcy, and in some cases, they're legally required to. If the company is going through a Chapter 7 bankruptcy, which is the kind where the company will be liquidated, shareholders are considered creditors. In this case, the shareholders' names and addresses are on the list of creditors that will appear in the official bankruptcy documents (the petition). If they want to file for bankruptcy, they must do it within a certain time period after their names appear on the petition. So if you're a shareholder in one of these companies and you want to pursue bankruptcy as an option, you'll need to check with your attorney to learn about any specific deadlines that apply in your case.
Now, if you are talking about personally, shareholders of a corporation can file for bankruptcy, just like any other person. To do so, they must first create or purchase the appropriate documents to file their petition, including schedules and statements. After that, they must file these forms with the court and pay the filing fee. However, if it is a closely held corporation there may be some serious consequences for doing so. I’ve seen a shareholder agreement where ownership or shares were forfeited upon the filing of a bankruptcy petition. So, you should read over all of your shareholder agreements. If you’re not sure, make sure you contact a lawyer for help. These guys do free consultations - tell them I sent you :
Ascent Law LLC
8833 S Redwood Rd Ste C
West Jordan, UT 84088
801 676 5506
Comments