I recently filed a Chapter 7 bankruptcy for a relatively wealthy individual. The debtor’s assets included 100% of the stock in an operating business with assets including real property. The question arose concerning the debtor’s operation of the business after filing personal bankruptcy. Since the debtor’s stock is part of the bankruptcy estate, does the trustee by virtue of owning all the stock assume control of the business. Or, can the debtor as president of the business operate the business including disposing of business assets after filing. In this case, the trustee took the position that the debtor’s bankruptcy did not act as a stay against business operations. Until the trustee as the new stockholder held a stockholder meeting to elect replacement officers and directors the trustee indicated that the debtor could continue normal business operations without violating the bankruptcy stay.
Chapter 7 Can A Debtor Operate His Wholly Owned Corporation After Filing Personal Ch. 7 Bankruptcy?