How to determine legal ownership of property after bankruptcy and loss of business?
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How to determine legal ownership of property after bankruptcy and loss of business?
My sister-in-law, husband, and myself formed a corporation and bought a small business. She filed bankruptcy which left us responsible for the business and debts. We then had to file bankruptcy (Chapter. 13). Now she wants a trailer that was purchased on her credit card but it was given away as a form of payment for services in leiu of cash. Does she have any legal standing that would award her this trailer that is not in our name or possession?
Asked on July 23, 2011 Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
You may need to repost your question with additional information, since it is unclear to whom the trailer was given to, and for what services: was it given by her to the corporation, as an investment (so to speak)? Was it purchased by her, then given by her to some vendor or contractor of the corporation to pay them for services rendered?
As a general matter, who bought someone or how it was paid for has no particular bearing on the object's ownership or later disposition: what matters is what was done with it. So a trailer given as a gift is the property of the recipient, as would be a trailer given as payment (essentiall barter) for services; a trailer given to the company as a partner's buy-in or investment (so investment in kind, not in cash) would belong to the company; etc. Of course, if the trailer was taken by her without her permission--e.g. she bought a trailer to use; then the company gave it away to a vendor to settle a debt without getting permssion to do so--is a different story. In that event, she can get the trailer back, since no one can give away something to which they do not have title, and the trailer's recipient may be able to sue whomever gave him the trailer under false pretenses.
For a more definitive answer, you need to provide additional detail.
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