Business owners in Washington may be able to avoid personal bankruptcy by structuring their company in a specific way. In many instances, executives and shareholders are not held personally responsible for business bankruptcy when a company cannot pay its debts. Experts say that this overarching rule may protect the estates of the executives and owners at Freedom Industries, the West Virginia company that is accused of releasing toxic chemicals into that state's water supply.
News articles show that one of Freedom Industries officials actually purchased a house on the same day that the toxic chemical leak was discovered. That man had served as the president of the company, but he was terminated from that position in early December. He remained employed in a peripheral position after that dismissal. Experts say that the business bankruptcy structure is likely good news for this man, who purchased a home for $375,000 in cash in early January; after the company is done filing for bankruptcy, it is unlikely that the man's personal assets will come into question.
Still, industry gurus say they expect the business bankruptcy to be highly scrutinized, especially since some large purchases were made at the time of the bankruptcy filing. The man in this case may come under fire if it is discovered that he purchased the house with a company check. However, a purchase using personal funds that had previously been taxed would be considered allowable.
Washington residents who want to learn more about their own bankruptcy exemptions and rights may benefit from speaking with a bankruptcy attorney. These professionals can help business owners and individuals who are filing for bankruptcy. Although bankruptcy is sometimes stigmatized, it can be a great way to regain your financial footing, and you may be able to keep some of your assets such as your home thanks to a homestead exemption.
Source: The Charleston Gazette, "Freedom execs' personal assets may be shielded" David Gutman, Feb. 17, 2014