The more I research Involuntary Chapter 7 procedur
Post# of 36563
(Total Views: 481)
Posted On: 07/18/2022 3:08:34 PM
The more I research Involuntary Chapter 7 procedures, the messier it seems to get.
https://www.nolo.com/legal-encyclopedia/invol...uptcy.html
“Once a debtor is in bankruptcy, the automatic stay—an order prohibiting collection activities—stops creditors from attempting to collect the debt on their own, leaving the creditor to share whatever gets recovered by the bankruptcy trustee appointed to the case.”
Bankruptcy Trustee:
https://www.nolo.com/legal-encyclopedia/the-b...cy-trustee
“Understanding the Chapter 7 Trustee's Role
The trustee receives a small fee for examining your paperwork and a percentage of any assets sold. This payment structure gives the trustee incentive to carefully scrutinize the debtor's property, including any property sold or transferred before the bankruptcy filing. Although the trustee must be fair to the debtor, their interests aren't always aligned. Therefore, how much the trustee will help you will depend on the individual trustee.”
Generex Trustee:
Looks like there is not a Case Trustee at this time
06/24/2022 33 Order Denying Motion to Appoint Trustee (Re: # 10). (Grooms, Desiree) (Entered: 06/24/2022)
But there is a U.S. Trustee
Office of the US Trustee
51 S.W. 1st Ave.
Suite 1204
Miami, FL 33130
(305) 536-7285
U.S. Trustee:
https://www.freedomlegalteam.com/7-ways-the-c...s-trustee/
Chapter 7 for Small Business Owners: An Overview
https://www.nolo.com/legal-encyclopedia/chapt...esses.html
Note under “Corporation”:
“Also, filing for bankruptcy gives creditors an easy forum to claim that the officers failed to follow corporate formalities—an action called piercing the corporate veil. Winning this type of lawsuit has the effect of making shareholders liable for corporate debt.”
Piercing the corporate veil:
https://www.nolo.com/legal-encyclopedia/perso...33006.html
https://www.nolo.com/legal-encyclopedia/perso...006-2.html
“In one scheme, the owners of a large corporation incorporate several undercapitalized subsidiaries (companies that do not have enough money to support their operations). The large corporation (called the "parent corporation"
finances the operations of and exerts control over the subsidiaries. Such subsidiaries are commonly called "dummy corporations" or "corporate shells."”
Take away:
I don’t think that Piercing the Corporate Veil applies to Generex since it has 122 million outstanding shares owned by hundreds of stockholders. But then again, I am not a lawyer.
I wonder if the spinoff of NuGenerex with the failed IPO, and the creation of the other non-stock subsidiaries, coupled with making Generex a strict “Holding” corporation is what triggered the SEC investigation?
This is going to take awhile to work its way thru the court. Until the value of all the Generex assets have been assigned, there is no way of knowing if we shareholders will have a chance of recouping any portion of our investment.
https://www.nolo.com/legal-encyclopedia/invol...uptcy.html
“Once a debtor is in bankruptcy, the automatic stay—an order prohibiting collection activities—stops creditors from attempting to collect the debt on their own, leaving the creditor to share whatever gets recovered by the bankruptcy trustee appointed to the case.”
Bankruptcy Trustee:
https://www.nolo.com/legal-encyclopedia/the-b...cy-trustee
“Understanding the Chapter 7 Trustee's Role
The trustee receives a small fee for examining your paperwork and a percentage of any assets sold. This payment structure gives the trustee incentive to carefully scrutinize the debtor's property, including any property sold or transferred before the bankruptcy filing. Although the trustee must be fair to the debtor, their interests aren't always aligned. Therefore, how much the trustee will help you will depend on the individual trustee.”
Generex Trustee:
Looks like there is not a Case Trustee at this time
06/24/2022 33 Order Denying Motion to Appoint Trustee (Re: # 10). (Grooms, Desiree) (Entered: 06/24/2022)
But there is a U.S. Trustee
Office of the US Trustee
51 S.W. 1st Ave.
Suite 1204
Miami, FL 33130
(305) 536-7285
U.S. Trustee:
https://www.freedomlegalteam.com/7-ways-the-c...s-trustee/
Chapter 7 for Small Business Owners: An Overview
https://www.nolo.com/legal-encyclopedia/chapt...esses.html
Note under “Corporation”:
“Also, filing for bankruptcy gives creditors an easy forum to claim that the officers failed to follow corporate formalities—an action called piercing the corporate veil. Winning this type of lawsuit has the effect of making shareholders liable for corporate debt.”
Piercing the corporate veil:
https://www.nolo.com/legal-encyclopedia/perso...33006.html
https://www.nolo.com/legal-encyclopedia/perso...006-2.html
“In one scheme, the owners of a large corporation incorporate several undercapitalized subsidiaries (companies that do not have enough money to support their operations). The large corporation (called the "parent corporation"
finances the operations of and exerts control over the subsidiaries. Such subsidiaries are commonly called "dummy corporations" or "corporate shells."” Take away:
I don’t think that Piercing the Corporate Veil applies to Generex since it has 122 million outstanding shares owned by hundreds of stockholders. But then again, I am not a lawyer.
I wonder if the spinoff of NuGenerex with the failed IPO, and the creation of the other non-stock subsidiaries, coupled with making Generex a strict “Holding” corporation is what triggered the SEC investigation?
This is going to take awhile to work its way thru the court. Until the value of all the Generex assets have been assigned, there is no way of knowing if we shareholders will have a chance of recouping any portion of our investment.
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