Quote:
Originally Posted by jsbertram
If your brothers' business goes bankrupt, the creditors can't get money out of you or your business just because you are brothers.
However, if both brothers are co-owners of the bankrupt company, their creditors can hound them both. However, they can't make claims against your personal property or assets that weren't part of the the bankrupt company. CPR and Canadian Creosote are 'sister companies' but have separate assets. When Canadian Creosote goes bankrupt, the creditors can't make claims any of the CPR assets.
How many times have you heard of a company declaring bankruptcy, and it is revealed later that before declaring bankruptcy the owner has moved assets out of the company into a new company 'owned' by the wife or kids. Even though the new company was purposefully set up beforehand to receive assets from the old company before it went into bankruptcy, the creditors can't chase after that new company or its owners (even if the new companies' owners have a family relationship to the owner of the bankrupt company).
BTW I'm not a lawyer, so don't take this as legal advice.
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There is a perfectly legal mechanism for this - known as Special-Purpose Entities, or "Bankruptcy Remote" Entities.
Although Canada Creosote was not an SPE, it's long before SPEs were developed.
Torode made extensive use of SPEs with the Arriva Project and other projects ; that way even if the project fails and goes into bankruptcy, the primary entity can remain viable.