August 30th, 2011 by Questions
If you file for personal bankruptcy and own a corporation – does the corporation have to go bankrupt too?
Posted from: Alberta
One Response to “Bankruptcy”
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August 30, 2011 at 8:27 am, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:
No, if you file for personal bankruptcy the corporation doesn’t necessarily need to file for bankruptcy as well.
But there are a few considerations.
First, as a bankrupt individual you legally cannot be a director of the corporation, at least while you are in bankruptcy.
The second consideration is that you would technically own the shares of the corporation, so if there is any value in the company this must be considered as the shares are considered a non-exempt asset and something that ultimately belong to your creditors.
As you can see this gets a little bit complicated. This is one of the reasons it is recommended you contact a local trustee and have them complete an assessment of the situation. That way you will know what you can expect in terms of both your personal situation and the company.