Can the trustee force my sister to sell our business if I filed personal chapter 7 bankruptcy? 19 Answers as of May 02, 2014

I have filed personal chapter 7 bankruptcy. My sister and I own a business, a storage facility, which is a 50/50 partnership. It is also my only employment. Can the trustee force us to sell the business, even though my partner did not file bankruptcy, and does not wish to sell the business?

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Law Office of Susan G. Taylor
Law Office of Susan G. Taylor | Susan G. Taylor
No, but he can sell your interest.
Answer Applies to: Texas
Replied: 5/2/2014
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
Yes the trustee can sell your portion of the business. It's obvious that you did not have an attorney help you with your case. The trustee is obligated to sell any unexempt assets. Its a simple as that. It may be difficult for him to do so but he is obligated to try.
Answer Applies to: California
Replied: 4/24/2014
EDWARD P RUSSELL | EDWARD P RUSSELL
You would have to value the business which means you would have to determine what assets it has. You would then subtract business debt from the assets to arrive at the equity you and your sister have in the business. Only one-half of that?equity would be property of the bankruptcy estate. You have about $12,500 in exemptions to use to subtract from your equity in the business. If your one-half interest is the business is more than about $12,500 you would have to arrange to pay the trustee that amount of money.
Answer Applies to: Minnesota
Replied: 4/24/2014
Law Office of Pho Ethan Tran PLLC
Law Office of Pho Ethan Tran PLLC | Pho Ethan Tran
The trustee can only force a sale of your half of the business if it does not fit within any exemptions. You can offer to buy back your half of the business from the trustee during the sale. The asking price is usually below fair market value to encourage a quick sale.
Answer Applies to: Texas
Replied: 4/24/2014
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
It depends on if you have exempted your share of the value. All assets should have been listed. Exemptions prevent the Trustee from selling the assets. If you did not list it, you lose it. If you could not exempt it, you will lose it. The trustee will get an attorney to sue your sister and force a sale. She is then give her share of the proceeds and your share goes towards paying creditors who make a claim and the trustee's fees and costs with any remainder going to you. You may have some remedies such as converting to a Chapter 13 although there is no absolute right to do that. Go see a knowledgeable local bankruptcy attorney who can advise you specifically what remedies are available to you. It is a very fact specific area of the law and you need help.
Answer Applies to: California
Replied: 4/24/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    Trustee can sell your 50% interest in the business. Maybe your sister should make a low offer. Just an idea.
    Answer Applies to: Colorado
    Replied: 4/23/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    They can try, but she would have to fight it in bankruptcy court.
    Answer Applies to: New York
    Replied: 4/23/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    The trustee can sell only your share of the business if you were not able to properly exempt it. I have to wonder why you didn't consider this problem before you jumped off a cliff wearing a blindfold. The most likely person to buy out your interest in the business is your sister, and she ought to have a conversation with the bankruptcy trustee about terms.
    Answer Applies to: Nevada
    Replied: 4/23/2014
    David R. Fondren, Attorney at Law
    David R. Fondren, Attorney at Law | David R. Fondren
    When you voluntarily file bankruptcy, you subject ALL of your assets to being liquidated if they are not exempt. This includes your interest in the partnership. There are three options. First your sister can redeem your interest from the trustee by paying him the value of your share. She would then own the business by herself 100%. Second, the Trustee can sell just your share to an investor. He then become your sister's partner. She has no voice or veto over who her new partner is. He/she will have the same authority and control that you do now. So he can start making decisions she does not agree to. Third, the entire business gets sold as the trustee proposes. This will probably maximize the value of the business because no one wants a partner they don't know either. Since your sister is not in bankruptcy, she will receive 50% of the proceeds. She can invest those proceeds however she deems fit. The new owner may or may not hire you to work there.
    Answer Applies to: Missouri
    Replied: 4/23/2014
    HARVEY S. MORRISON, ATTONEY AT LAW
    HARVEY S. MORRISON, ATTONEY AT LAW | HARVEY S. MORRISON
    Yes. But your sister can probably buy your interest in the business from the Trustee with a possible "discount". Your interest in the business is property of the bankruptcy estate under Title 11 USC.
    Answer Applies to: Ohio
    Replied: 4/23/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    The trustee does have the power to sell your former share of the business. Your sister has the right to buy your former share and could most likely do so at a bit of a discount (as the trustee would not have to incur the expenses of a sale).
    Answer Applies to: California
    Replied: 4/23/2014
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    He does not have to force you to do anything. When you filed bankruptcy he became the owner of your interest in the partnership on behalf of the creditors. He has a right to sell your brother's interest to get at your interest. It does not matter that it provides you employment and that you need it. These are things which your attorney should have told you that you risked by filing. If your attorney did not it was malpractice. There may be a defense of first right of refusal in a partnership agreement which may be in your partnership agreement if you have one.
    Answer Applies to: Michigan
    Replied: 4/23/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Yes. It is an asset. Your attorney should have filed a ch 13.
    Answer Applies to: Florida
    Replied: 4/23/2014
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    Unless you have an exemption you can use for your 50% interest, which appears not to be the case, yes the trustee has that power. Your sister can try to buy your interest from the trustee and negotiate a 'quick sale' price to keep the business.
    Answer Applies to: California
    Replied: 4/23/2014
    Cameron Totten | Cameron Totten
    Yes. As all of your assets become the assets of the trustee upon the filing of a Chapter 7, the trustee can liquidate your 50% interest in the partnership to pay creditors. You can always negotiate some kind of settlement with the trustee but he/she will have a lot of leverage.
    Answer Applies to: California
    Replied: 4/23/2014
    Ronald K. Nims LLC | Ronald K. Nims
    In theory, yes. I'm sure the trustee would be happy to sell your half to your sister. Although, since the point of the exercise is to convert the proceeds into legal fees for the trustee, the trustee will do bunches of unnecessary and very complex (but completely boilerplate, chunked out by a paralegal) legal work. If your sister is unwilling to deal with the trustee, the trustee has the power to sell the business and give her 1/2 the proceeds. If you had consulted an attorney, she could have arranged the ownership so the trustee could not sell the business.
    Answer Applies to: Ohio
    Replied: 4/22/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    My guess is that you did not have a lawyer assist you in filing bankruptcy. Any business you have an interest in is considered an asset which is available for payment of your debts unless you can protect it under a bankruptcy exemption. When you file bankruptcy, you give the trustee legal control over all your assets and it is the trustee's obligation to liquidate non-exempt assets for the benefit of your creditors. At this point, you need legal advice fast because your sister can be forced to sell the business if she is not able to buy your half from the trustee. You might be able to find an exemption to cover it or you might be able to convert to a Chapter 13 and pay for your share of the business over a period of 5 years or less.
    Answer Applies to: Oregon
    Replied: 4/23/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    See a lawyer about ch13 ASAP. In ch 13 you can keep the business and pay your share of the value over 60 months.
    Answer Applies to: California
    Replied: 4/23/2014
    The Law Offices of Kristy Qiu
    The Law Offices of Kristy Qiu | Mengjun Qiu
    No, but he or she can ask that you prove the value of the business and pay your half of the value in the chapter 7. If you don't have the cash to pay for it, convert the case to a chapter 13 so that you can pay it in 3 or 5 years.
    Answer Applies to: Florida
    Replied: 4/22/2014
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