Effects on different corporation

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Oreo

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Effects on different corporation
« on: November 08, 2014, 11:51:29 AM »
Hi there,

I am wondering,  if I declare bankruptcy in one corporation how will that effect my other corporation?
I do owe the bank about 40k how will that effect me personally or the other business?

Tha k you

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NotATrust-E

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Re: Effects on different corporation
« Reply #1 on: November 08, 2014, 12:16:30 PM »
1) How will it affect your other corporation?
I'm assuming that these are actual incorporated businesses. Are there shared financial or physical resources? If the two are truly independent other than a shared director, I don't see how there would be an effect.

2) How will it affect you personally?
It depends. Have you guaranteed the debts of the company? If so, then you would be personally liable for the debt to the bank. There are also potential tax implications - you may owe money to CRA as a director's liability.

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Oreo

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Re: Effects on different corporation
« Reply #2 on: November 08, 2014, 12:38:49 PM »
I should clarify that the corporation owes 40k and I am not reliable personally. I am not worried about my house but I am wondering what are the effect In the future, say when I need some more credit from the bank for my other corporation will it have any effect on their decision. My banker said I should not owe the bank so much but I should cover the debt before declaring bankruptcy.  His he saying that because he must or will it effect me in the future

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NotATrust-E

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Re: Effects on different corporation
« Reply #3 on: November 08, 2014, 01:31:08 PM »
I think this is probably a question of internal bank policy. I can see a bank not wanting to extend further credit to you or your other company, but I don't know how much it would affect their decision. There are always other lenders out there should you need more funds, but they may ask if you have been the director of a company that declared bankruptcy.

Sorry I couldn't be of more help.

 

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