By Ryan C. Wood
There seems to be a misconception about when a corporation or limited liability company files for bankruptcy and the business is owned by one or a few individuals. In the news, talk shows and with speaking with people on the street I hear over and over again such and such has filed bankruptcy. I think the most common name I hear is Donald Trump. I had a client at a meeting of the creditors meeting whisper in my ear something about the debtor currently being questioned by the Trustee and then Donald Trumps name. What she said was as if Mr. Trump had filed bankruptcy too. As far as I know Donald Trump has never filed for personal bankruptcy and only his casino holdings has ever filed for bankruptcy protection. This is a huge distinction that is very important.
Corporations and limited liability companies are separate legal entities from the owners. This is the whole point in creating the business in this form. Creating a separate legal entity keeps your personal assets safe and protected from the debts or harms created by the corporation or limited liability company. You must keep up the corporate formalities and run the corporation as a separate legal entity. You must keeping the assets, expenses and income separate from your own personal finances. Like many Americans Mr. Trump has many business interests that are set up under various legal entities. This is smart. If one business venture does not work out it should not negatively effect or destroy his other interests. Mr. Trumps venture into gambling has not gone well.
The formerly named Trump Hotels and Casino Resorts (DJT) and now the Trump Entertainment Resorts, Inc. has filed for bankruptcy protection under Chapter 11 three times since 1991. I cannot imagine the amount of bankruptcy attorneys fees that have been expended in all three cases. Chapter 11 allows corporations to restructure their debts and allow the corporation to survive and hopefully prosper. The company still exists so something must have gone right.
For more information about bankruptcy, either personal or business, you may contact one of our bankruptcy lawyers by calling 1-877-963-9543 or providing us your information on-line in a submission form.