Buy-Sell Agreement FAQ

Can a co-owner's personal bankruptcy affect the business?

Related Ads

Need Professional Help? Talk to a Lawyer

Enter Your Zip Code to Connect with a Lawyer Serving Your Area

searchbox small

Questions:

Answer:

Can a co-owner's personal bankruptcy affect the business?

In the worst case scenario, a bankruptcy trustee could liquidate the business (sell all of its assets) and take half to pay the bankrupt owner's debts. To prevent a business from getting tied up in bankruptcy court, the owners can sign a buy-sell or buyout agreement that requires a co-owner who faces bankruptcy to notify other co-owners before filing. Under the terms of this agreement, this becomes an automatic offer to sell the bankrupt owner's interest back to the other owners. The buyout money goes to the bankruptcy trustee and the business can proceed without difficulties.

Form Your LLC Online

Form a Limited Liability Company

Form your own LLC, including:

  • Simple Interview Style Application
  • Company Name Validation
  • Automated Error Checking
  • Professional Articles of Organization
  • Unlimited Customer Service Support

Find a Business Lawyer

Related Ads
LA-NOLO4:DRU1.6.5.2.20150505.32030