Q: Can I protect my business in bankruptcy?
So how do you protect your business? How do you know if your business will be subject to forfeiture? There are a number of factors to consider.
To start, if you are a sole proprietor, or a “one-man” or “one-woman” shop providing a service to your customers (think: handyman, plumber, home improvement Specialist, etc.), YOU are in essence, the most valuable asset and you cannot be sold. YOU are your business. If you stop working, does your business come to an end? If you stop working, is there enough good will in your business, that you could sell your business?
If your business could be sold in its entirety, or sold in parts (think inventory, equipment, cash on hand, valuable lease, website, customer lists) you will be squeezed by the bankruptcy trustee to either “make a deal” to keep your business, or else the trustee will sell your business.
In realty, most bankruptcy trustees eyeballing a small “one-person” business will be most interested in what the value was on the date of bankruptcy filing for the business’s bank account(s), receivables and equipment. You will likely be “squeezed” for a settlement based on that value.
If your bankruptcy case is timed just right, so that the value of those business assets are at a minimum on the date of your filing, the bankruptcy trustee may abandon the estate’s interest in the business back to you if the liquidation of the assets would provide a negligible return to your unsecured creditors.
Do not underestimate the perks of marriage! If your business is owned by you and your spouse, and you took your interest at the same time during the time of your marriage, and assuming you have no joint unsecured creditors between you, you can protect your business by utilizing the Tenancy by Entireties property right we previously discussed!
We simply cannot overstate that one of the most powerful benefits of a strong marriage after love, sex, children and companionship, is the Tenancy by the Entireties exemption and its broad application in the State of Florida.