S. J. DAVIS LAW

As long as a corporation pays its Creditors, its financial transactions are exempt from outside scrutiny (except for the IRS). However, when a corporation becomes insolvent, either by not timely paying its debts (cash flow or equitable insolvency), or if its liabilities exceed a "fair valuation" of its assets (balance sheet insolvency), corporate fiduciary duties and obligations are radically affected. The Insiders' fiduciary duties shift from the Debtor's shareholders (to maximize share value) to its Creditors (to preserve assets to pay debts). The corporate assets become a trust fund for the benefit of the corporation's Creditors and the INSIDERS are the Trustees. The Debtor's financial transactions are now subject to scrutiny by its Creditors (even before Judgment) and, like the Chief of Police in "Casablanca", one would be "shocked" to find fraudulent transfers to INSIDERS, their families, and successor businesses as well as use of the Debtor's assets to pay Insider personal debts,..

Also known as: S. J. Davis Law, PLLC

Primary location: Mesa United States