Re: Personal Bankruptcy of S corp officer

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The mere fact that a stockholder of an S corporation filed
bankruptcy will not endanger the corporation or the other
stockholder. However, in most such small business, if you read
the fine-print on all the documents, you may find that there were
personal guarantees of corporate debts and cross-
collateralization. At best, you're looking at a headache.

On 8/24/05, 00 wrote:
> Sorry, it sounded like a homework question. We get them from
> time to time.
>
> On 8/24/05, E Ryan wrote:
>> Homework????? It is a construction business.
>>
>> Or do you mean is this a homework question? No it is my
>> husband and I am concerned he(we) will pay for his partner's
>> debt. The partner takes weekly draws in addition to a salary
>> and cannot make it through the week without borrowing more.
>>
>> On 8/24/05, 00 wrote:
>>> Homework?
>>>
>>> On 8/24/05, E ryan wrote:
>>>> The s corp has two officers each own 50&37; 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?