Question:
“With the slowdown caused by COVID-19, I am worried that my business will not be able to pay its suppliers and other creditors. Can I take money or other assets out of the company to protect them from creditors?”
Answer:
Very likely not. There are asset-sheltering strategies that can be used to protect assets, but rarely when you are facing actual creditor claims and the looming failure of your business. The time to consider such strategies is long before any unpaid creditors exist.
Asset-sheltering is a complicated area, and great care must be taken in pursuing any such strategy. Without being aware of the laws that exist for attacking asset-sheltering attempts, you may find yourself faced with a fraudulent conveyance or other similar lawsuit against you. It is best to seek the advice of insolvency professionals together with tax and other advisors prior to transferring an asset in order to avoid or limit potential problems in the future.
Read our earlier post on “Attacking creditor-proofing transactions” for more information on how your asset transfer might be attacked.
Gehlen Dabbs Cash LLP is OPEN to help you and your business during these challenging times. Please contact us for assistance.