Whether you are going through the business bankruptcy process or researching the process ahead of your own filing, you’ve likely heard of the bankruptcy trustee. What does a business bankruptcy trustee look for? Kerkman & Dunn can provide answers.
What is a Bankruptcy Trustee?
Bankruptcy is a legal process, but many go into it with the hopes of gaining something. Whether you are filing Chapter 11 or Chapter 7, some business owners think they can game the system, and come out ahead, but that’s not what bankruptcy is all about.
Instead, it’s a way for you to either escape a sinking ship (in the case of Chapter 7) or stop a sinking ship from sinking (Chapter 11), and sometimes to stop a ship from sinking stuff has to go overboard.
The legal process will go forward and it will take a long hard look at your ship (business). Often, that hard look comes from the bankruptcy trustee. They are charged with understanding your bankruptcy estate, and their role is vital for the legal process to continue and conclude.
Questions a Trustee Might Ask
There are a lot of questions a trustee might ask during bankruptcy proceedings, and to understand their questions and why they are asking them it can be helpful to know what a business bankruptcy trustee is looking for. Here are the primary things they are trying to discover.
- Undervalued assets—If one or more of your assets is undervalued, it can misrepresent your bankruptcy estate’s value to your creditors.
- Omitted assets—Just like with undervalued assets, leaving assets out of your estate is a misrepresentation of assets to creditors.
- Undisclosed income—All income needs to be reported on your bankruptcy paperwork. Any that is missing will send up red flags.
- Fraudulently transferred property—We brought this up before but it happens a lot. A business owner pays a debt owed to a family member or transfers assets to someone else in order to protect them. Either way, this is fraudulent activity.
Secured and Unsecured Debt Difference During Bankruptcy
The Importance of Honesty in your Bankruptcy Paperwork
In order to avoid issues during the bankruptcy process, it’s important that you remain honest with your bankruptcy paperwork. This is part of the reason why hiring an experienced business bankruptcy attorney—like Kerkman & Dunn in Milwaukee—is so vital to the process. They can help ensure that all your paperwork is in order before the process begins so that you don’t run afoul of the courts and potentially even be charged with fraud.
What should you do before filing for business bankruptcy?
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