7 ms·

Ok, if you formed an LLC and didn't sign personal guarantees with rackspace or your lawyer then I don't see how you are personally on the hook for this.

by javery 16y ago

debtscrewed 16y ago
It's a C-Corp. (Edited: made an error and said S-Corp earlier) I'm not 100% familiar with bankruptcy, but I'm assuming it'd damage my name as well as my co-founder's, as well as going into stuff I don't want to get into (court, etc.) Rather have a way to pay back this $6k.
- javery 16y ago
  If it's an S-Corp then you are protected personally - you don't necessarily need to file bankruptcy but I also wouldn't pour anymore of your money into it if it is jeopardizing your personal finances. Talk to the vendors, explain the situation and then talk to your co-founder and come up with a plan to pay it off through the company (consulting, selling assets, etc)
- ccarpenterg 16y ago
  I don't understand. You're in USA? It is supposed that you can fail in USA. That's capitalism!. Why do you want to pay those debts? Your company is bankrupt and it has to be declared bankrupt then go into liquidation in order creditors recover their money. Those are the rules of this game.
- calloc 16y ago
  You are protected under a C-Corp, unless they can pierce the corporate veil in court (unlikely if you didn't do anything you weren't supposed to do) you can walk away and the only assets any of the creditors can go after are those of the company. All of your personal assets are free and clear.
  - jacquesm 16y ago
    > My co-founder owns a majority of the company Minority shareholder, so he's protected anyway, no way this could be laid at his private door, unless there is outright fraud on his account.
borism 16y ago
I certainly hope so, but how was he able to get his SSN to the verge of being blacklisted?
- dangrossman 16y ago
  Any time a merchant account is closed for cause, such as having too high a chargeback rate, the underwriting bank has a contractual obligation to place the merchant in the TMF (Terminated Merchant File) and MATCH list. Both the company AND the names/SSNs of the principals of the company are listed. This is intended to protect other banks -- so that a company with a history of payment fraud or other problems can't simply go bank to bank as each account is closed. This is what would be scaring me more than any of the debts. Almost no bank will open a new merchant account for him if he's on TMF/MATCH, and that includes if he's just one of several owners of a future company -- merchant account applications ask for a list of all principals for just this reason. He'll find his way out of the debt problem, whether it's through bankruptcy or repayment, but being listed on TMF/MATCH can prevent him from starting a new business that accepts credit cards for the rest of his life.
  - deleted 16y ago
    [deleted]
  - borism 16y ago
    > so that a company with a history of payment fraud or other problems can't simply go bank to bank as each account is closed but he's not a company. and if he starts another one he can list somebody (or pretty much anybody) else as principal if I understand correctly: http://answers.yahoo.com/question/index?qid=20070909074529AAgMvS3 http://answers.yahoo.com/question/index?qid=20070909074529AA...
    - dangrossman 16y ago
      Doesn't that require he rely on the true owner of the business (the person whose name is on it) not cutting him out of it, completely legally? He can't start his own business, he can't be a partner in a business, he can't be an owner in a business... because then he'd be a principle and the company's merchant account application would be denied.

Ok, if you formed an LLC and didn't sign personal guarantees with rackspace or your lawyer then I don't see how you are personally on the hook for this.

by javery 16y ago

Ok, if you formed an LLC and didn't sign personal guarantees with rackspace or your lawyer then I don't see how you are personally on the hook for this.

debtscrewed 16y ago

It's a C-Corp. (Edited: made an error and said S-Corp earlier) I'm not 100% familiar with bankruptcy, but I'm assuming it'd damage my name as well as my co-founder's, as well as going into stuff I don't want to get into (court, etc.) Rather have a way to pay back this $6k.

javery 16y ago
If it's an S-Corp then you are protected personally - you don't necessarily need to file bankruptcy but I also wouldn't pour anymore of your money into it if it is jeopardizing your personal finances. Talk to the vendors, explain the situation and then talk to your co-founder and come up with a plan to pay it off through the company (consulting, selling assets, etc)
ccarpenterg 16y ago
I don't understand. You're in USA? It is supposed that you can fail in USA. That's capitalism!. Why do you want to pay those debts? Your company is bankrupt and it has to be declared bankrupt then go into liquidation in order creditors recover their money. Those are the rules of this game.
calloc 16y ago
You are protected under a C-Corp, unless they can pierce the corporate veil in court (unlikely if you didn't do anything you weren't supposed to do) you can walk away and the only assets any of the creditors can go after are those of the company. All of your personal assets are free and clear.
- jacquesm 16y ago
  > My co-founder owns a majority of the company Minority shareholder, so he's protected anyway, no way this could be laid at his private door, unless there is outright fraud on his account.

borism 16y ago

I certainly hope so, but how was he able to get his SSN to the verge of being blacklisted?

dangrossman 16y ago
Any time a merchant account is closed for cause, such as having too high a chargeback rate, the underwriting bank has a contractual obligation to place the merchant in the TMF (Terminated Merchant File) and MATCH list. Both the company AND the names/SSNs of the principals of the company are listed. This is intended to protect other banks -- so that a company with a history of payment fraud or other problems can't simply go bank to bank as each account is closed. This is what would be scaring me more than any of the debts. Almost no bank will open a new merchant account for him if he's on TMF/MATCH, and that includes if he's just one of several owners of a future company -- merchant account applications ask for a list of all principals for just this reason. He'll find his way out of the debt problem, whether it's through bankruptcy or repayment, but being listed on TMF/MATCH can prevent him from starting a new business that accepts credit cards for the rest of his life.
- deleted 16y ago
  [deleted]
- borism 16y ago
  > so that a company with a history of payment fraud or other problems can't simply go bank to bank as each account is closed but he's not a company. and if he starts another one he can list somebody (or pretty much anybody) else as principal if I understand correctly: http://answers.yahoo.com/question/index?qid=20070909074529AAgMvS3 http://answers.yahoo.com/question/index?qid=20070909074529AA...
  - dangrossman 16y ago
    Doesn't that require he rely on the true owner of the business (the person whose name is on it) not cutting him out of it, completely legally? He can't start his own business, he can't be a partner in a business, he can't be an owner in a business... because then he'd be a principle and the company's merchant account application would be denied.