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Old 03-03-2010, 10:11 AM   #1
acecycleins
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Default Need a Legal question answered

Let me preface this with a "Ken, don't worry".

One of the "original" godfather's for the motorcycle only insurance agencies and ACE are in talks to join forces. Why? 'Cause new bike sales (or lack of) has made us both stagnant and survival makes this seem feasible.
Actually, Jerry has put everyone of my competitors in business for the last 25 yrs of his business. What makes us get along so well is that I self-taught without ever asking for his assistance. That and my ability to run better customer service with less staff impresses the hell out of him.
Here's the question: Can I desolve a corporation that has unsecured creditcard debt without bankrupting the actual corporation first?

Why do I ask this? Well, our commissions are actually pretty good if you were a single employee, but it's not for two. Jerry wanted to pay for the company by allowing us to keep the ACE commissions. While this sounds wonderful- tax-wise it's not exactly great.
So I came up with the idea of "giving" him the book in exchange for paying Kim a salary (based on those very commissions) and then allowing the taxes to be taken via payroll.
To me this sounds like a wonderful idea, but I have been told that you can't desolve a corporation with exisiting debt no matter the amount.
If I can desolve the company and do what I want with "giving" the book of business to Jerry then my 2500 customers would gain a 5 person staff instead of just me and Kim. I would become an employee of Jerry's and his agency and the ACE brand would disappear (sad but true), but the combined customer base would nearly equal 6000 active policies. Those are huge numbers for an independent, single store operation. And as much as I'd miss being the "owner" I will equally not miss dealing with the headaches of being an owner.
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Old 03-03-2010, 10:19 AM   #2
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Good idea Ace. Ask the clowns at MO for legal advice.
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Old 03-03-2010, 11:07 AM   #3
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You have a PM.
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Old 03-03-2010, 01:13 PM   #4
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Seru-I do this because many of us are self-employed and are successful. If I can get something answered by asking to guys that I converse with everyday then any advise is good. We may be MOrons, but were certainly not stupid.
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Old 03-03-2010, 01:48 PM   #5
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Originally Posted by acecycleins View Post
Seru-I do this because many of us are self-employed and are successful. If I can get something answered by asking to guys that I converse with everyday then any advise is good. We may be MOrons, but were certainly not stupid.
Sum of us heres got smarts real good!
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Old 03-03-2010, 02:02 PM   #6
trenttheuncatchable
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Okay, I am not a business attorney (or any kind of attorney), but I would guess that you can't just dissolve a corporation (this is an LLC, right?) if it has outstanding debts. The debts transfer with the company if you sold it, and otherwise you'd have to do something like bankruptcy, or your creditors could go after you in court. That is my (admittedly very limited) understanding.

On another note: Wahoo! I got to take the bike to work today .. in the Chicago area, no less! A bit of a cold breeze on the chin, but I'm not really complaining.
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Old 03-04-2010, 10:07 AM   #7
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I got Scott to help me answer a few things. Looks like I can keep the corporation active- yet, I can turn control of the book to my buddy. I let my licensing and E&O go inactive allowing the company to be dormant. Then all I have to do is leave the phone lines active with a pre-recorded message to let them know that my buddy's company will be handling the policies. That will allow me to pay the debt over time and will release him from liability of those debts.
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Old 03-04-2010, 01:51 PM   #8
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So your giving him all the new business and active clients, in return for a salary, and you have to pay off the company's existing debt yourself?
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Old 03-04-2010, 02:12 PM   #9
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So your giving him all the new business and active clients, in return for a salary, and you have to pay off the company's existing debt yourself?
In a "sort of" kinda way. The point is that J and I need to join forces to allow survival. His company is 25yrs old and has no debt (to speak of). Mine has credit card debt that is higher than the projected commisions for 2010. Kim has to personally bankrupt (it's all in my sister's name- ya'll try doing that with your sisters. betcha can't). We need to desolve the company, but those cards obviously won't allow it without payment in full. Well, both J and I don't have that type of cash handy. So, trying to make one company disapear without it effecting the tax and debt situation of the other is tricky. But if I keep the ACE part alive for the debt purposes I can pay the debt over time.
That's my theory, anyway. But what the hell do I know about the law.
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Old 03-04-2010, 02:14 PM   #10
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Laws differ from state to state. You better get some real advice before you screw yourself up.
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