There is a great temptation to move tools and office equipment, particularly computers and software, away from the business location. As mentioned elsewhere, it is often not clear whether the business owns a computer, particularly a portable computer, or software. This urge must be resisted. Hiding assets from the trustee, which includes moving material from one location or category to another, is
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bank ruptcy fraud. It can easily lead to criminal prosecution and jail time. Do not expect your lawyer to help you accomplish this fraud. The lawyer has a duty to the court to make sure the system is not cheated of assets, and the lawyer could lose his or her license if he or she knowingly allows a client to commit fraud.
Besides, it is not at all necessary to run such a risk to regain the tools and equip- ment. Office furniture is easy to replace. Your computer software and the records contained in them have almost no value to anyone else. For this reason, the trustee is likely to abandon them or sell them back to you for a very low price.
In fact, the biggest danger is that the trustee, presuming that there is no value or utility in the software, will casually abandon it or have it destroyed. You can best help yourself here by letting the trustee know that you wish to have or buy these records and software.
Business Name
Your business name has a great deal of value. If your business was incorporated, the corporate name was listed with your state’s secretary of state, and that partic- ular name is probably protected. If you wish to keep it, you should make sure the old corporation is legally dissolved. This will free up the business name. Then, you can simply incorporate a new busi ness with the same name, or otherwise file to protect the business or trade name. Remember, the trade or corporate name is an asset of the court, and if you have a particularly good business name, the trustee may try to sell it. Some names may be so good that someone would be willing to pay the trustee to obtain the name, but this is unlikely. There is no central exchange where people looking for business names can go, so it is hard for the trustee to find a buyer.
Business Phone Number
Another important asset of the business is the phone number. Your phone number is your lifeline as it is how most of your customers get in touch with you. Nothing
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signals that you are gone more definitely than the message saying, “This number has been disconnected,” or for the caller to reach a private residence rather than your business.
Example:
Several years ago, we moved our office from one part of town to another, far enough away that the phone company made us use a different phone number. We let all the clients we could think of know about our new phone number. Still, our business fell off. When this happens, one never knows if it is caused by seasonal adjustments or overall business climate, but by sheer chance, we learned that our old phone number had been assigned to the child of a man we used to work with.
After about a year and a half, he told us that it was still a real prob lem for his son. His son was getting phone calls meant for us all the time, and his answering machine was being filled with messages meant for us. This one-in-a-million set of circumstances let us see both sides of how important a phone number can be. We were wondering where our business had gone, and the boy was being aggravated by unwanted business calls.
If you want to continue your phone service, the answer is once again fairly simple. The phone number has absolutely no value to the trustee and he or she will likely sell it to you for a normal price or just allow you to have it back. You must, in addition, be sure that the monthly bill is paid to the phone company so it does not cut off serv ice, and ensure that it records the formalities of moving ownership from the corporation to you or your new company.
Business Location
Location can also be important to your business. Many businesses want to keep operating in the same location, since that is where their customers know to find Continuing in Business After Bankruptcy 147
them. In addition, most businesses draw their customers from a specific geographic area. Simply put, they come to you because you are convenient. If you move to another part of town, they may find a new business to frequent.
It is possible to keep the same location, but it does involve a bit more risk and trouble. If the corporation owns the building or land, it will be very difficult to keep the same location. The building and land normal ly have value and a ready market into which the trustee can sell. You, on the other hand, likely do not have any money to buy them from the trustee.
Keeping your location is easier if the space is leased. The space is normally a liability to the trustee, as he or she has to keep on paying the rent if he or she is going to try to sell the lease. The market for such a sale may be narrow as most leases limit subleases and what types of business can be operated in the space.
Normally, the trustee will give up his or her right to the space fairly casually.
Your landlord may be more of a problem. You very well may have stopped paying him or her for a period of time while your business was going downhill. He or she may not be interested in having you continue as a tenant and may be happy to get rid of you without having to go through the legal steps of eviction. On the other hand, it is a lot easier on him or her to have you in the space. He or she has little downtime in receiving rent, and will not have to do any upfitting. If you want to stay in the same loca tion, by all means talk to the landlord. Often you will be surprised at what a landlord is willing to do with you if you can present a realistic case on how you can pay your rent in the future.
Creditors and Other Problems
Remember, though, that there are problems with keeping everything the same.
Creditors are likely to feel that the bankruptcy was just a sham. They may continue to make collection efforts against you as the proprietor. It can be very difficult to explain to them or the court that you are not the same entity.
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Another problem with continuing the business after the bankruptcy is that for a period of time the business will be closed. In a Chapter 7 bankruptcy, operations must stop and the assets are sealed. To avoid a “Going out of Business” sign, most proprietors put out a more ambiguous sign such as “Closed for Inventory,”
“Closed for Remodeling,” or even “Closed for Vacation.” While this will not fool anyone who is closely moni toring the location for very long, it may help with casual customers who come by only once every month or two, as by the time they come back, you are back in business.
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People who have gone through a financial storm normally have one of two reac- tions—they never want to obtain credit again, or they won der if they can ever get credit in the future.