Re: Personal Bankruptcy of S corp officer

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Mr. Dawg,

Thank you for the response (the original posting should have
been 50 50 in stock). There are no loans. This is a
construction enterprise and each contributed some equipment
(equal) all other equipment was purchased from business
revenues. My concern is the one officer will declare personal
bankruptcy and the other officer will end up paying the debt
from the business revenues.

But you have identified an additional concern - the one officer
may be using the business to obtain personal credit. Is this
possible?

On 8/24/05, Prairie Dawg wrote:
> Depends on what the S corp owners have agreed to secure
> their debts. It's quite common in small enterprises for the
> owners to have to back up bank loans with their personal
> guarantee.
>
> On 8/24/05, E ryan wrote:
>> The s corp has two officers each own 50&50; of the stock.
> One
>> officer has excessive personal debt not related to the
>> business. If this officer files for personal bankruptcy
> or
>> creditors begin to take collection action is the S corp
>> cash in danger. For example if there is $60,000 in cash
> in
>> the S corp bank account (both officers can write checks)
>> would any, all of this money be required to pay off
>> personal debts of the one officer?