Posted by IB (NJ) on November 23, 2003 at 12:04:52:
Thanks Tim. Your information gives me a foundation to work from when speaking with my attorney tomorrow about this. I’ll keep everyone posted.
Buying house from biz. in chap.11 BK? - Posted by IB (NJ)
Posted by IB (NJ) on November 22, 2003 at 19:34:19:
After sending out letters to the possible addresses I thought the missing owner of an abandoned property might be, he finally responded and gave me call. He’s interested in selling a boarded sfh that’s headed to tax foreclosure.
Here’s where it gets interesting. The owner is actually a principal in a company that was taken to court by the state of NJ (successfully) for equity skimming. In fact, the property is in the company’s name (No need to go into the name of the company or the individual I’m dealing with). The company has 2 principals, with one living here in NJ and the other (the one I’m dealing with) living out of state. I don’t think the company is active any longer and filed chapter 11 a year or two ago (maybe 3 years ago). So now I have a couple of questions:
1)Despite the ch. 11 BK, can the company still sell the property? I’m thinking maybe I would have to look up the specific ruling regarding his BK case. But maybe someone could breakdown what generally happens in a ch.11 case.
- Would there be any fallback I would have to worry about in dealing with a smeared company? i.e. the state could start looking at me. Maybe that property I got for 60% fmv and flipped would be considered “predatory buying”. Yes sounds silly but anybody making money during a recession is a potential crook these days
Your thoughts?
Re: Buying house from biz. in chap.11 BK? - Posted by Tim- chi.
Posted by Tim- chi. on November 23, 2003 at 11:55:30:
IB,
You may want to confirm whether the corp. is active. If it’s inactive- perhaps involuntarily dissolved by the state for non-filing of their annual report- then you will have difficulty getting title. To pass title the corporation may have to be reinstated, but there may be legal reasons why the principals may be reluctant to do this.
Regarding the bankruptcy- I would ask the seller if it was filed voluntarily or were they forced into a chap.11 by a creditor alleging fraud. If it was entered voluntarily he should know the status of the case. If the bankruptcy case is active (which sounds unlikely here) you would need to talk to the Trustee about buying the property as the court would have to sign-off on any sale of corporate assets. If the case has been dismissed then you do not have to worry about the bankruptcy.
Your biggest issue is determining whether the corp. is active. Also if you pursue this deal you will want to do a lien/UCC search on the corp. to determine whether there are liens/judgments against the corp. that may cloud title.
I wouldn’t worry about buying a property from this corporation but I would be careful dealing with the former principals. I would verify everything independently and be sure not get too close to them in trying the work out a deal.
Good luck- and keep us posted on your progress.
Tim Foley
Re: Buying house from biz. in chap.11 BK? - Posted by acw
Posted by acw on November 23, 2003 at 07:51:00:
This is a good question.
Have you tried contacting a bk attorney?