Bankruptcy Indiana

We can talk all day about the so-called "corporate veil" and about how incorporating a business can serve to protect the business owners from personal liability, but after almost twenty-five years as a lawyer for small business bankruptcy in Indiana, I'm here to tell you that, in the real world, the "veil" gets pierced. That happens a lot.

As a debt consolidation lawyer offering bankruptcy services in Indiana, I was struck by the fact that two different business bankruptcy stories were featured in the Indianapolis Business Journal this very week, and one is a perfect illustration of the point I'm always making about the way personal and business bankruptcy seem to intertwine. 

One news story was about the Chapter 11 bankruptcy filed by the owner the owner of the Sherman Park business complex, home of the old RCA plant. The lack of new tenants for Sherman Park has meant not enough money is coming in to renovate and lease the half-vacant property, and the purpose of filing bankruptcy in Indiana is to "buy time", paying off lenders in installments while the property gets on its financial feet.

But in talking with the Indianapolis, Anderson, Bloomington, and Columbus bankruptcy lawyers who work in the four Mark Zuckerberg bankruptcy law offices about the two stories in the IBJ,  we agreed that the second corporate bankruptcy was much more typical of the small business bankruptcy Indiana cases we've been seeing. That's because the Steven Carter Ross personal bankruptcy in Indiana is what IBJ calls "a mix of business and personal woes".

Ross, by way of background, has for many years owned and managed the Vogue nightclub.  Two legal matters involving Ross are going on at the same time: He's filed a Chapter 11 bankruptcy for the dance club called Electra which he owns in Cincinnati, and is also going through divorce proceedings here in Indianapolis. Where the Vogue enters into all this is that the bankruptcy judge will decide whether Ross can keep the Vogue or whether it needs to be sold to satisfy creditors (for the other business) and also satisfy Ross' obligations under the divorce decree.  As IBJ's Peter Schnitzler explains after interviewing the attorneys in the case, "the divorce's division of marital property, now directly tied to the bankruptcy, also will bear on what Ross gets to keep."

Even in cases where divorce isn't involved in a bankruptcy, many of the small business owners who come to me for help with financial issues have "done it to themselves", pierced their own corporate veil in a way.  What I mean is that often business owners are often not as careful as they should be to keep the business and the personal money matters separated. By the time they come to me for Indiana bankruptcy help, it's too late to fix the situation, with the result being that, under the bankruptcy laws of Indiana, both individual and business bankruptcy will need to be dealt with.