Business owners in New Jersey may be interested to learn about a case involving the closure of a non-profit organization in another state. The non-profit was a corporate entity that had an endowment attached t it. Recently, the corporation filed for a business bankruptcy after its patient load dropped dramatically.
According to a recent report, the corporation ran a hospice for the care of dying people in another state. The business began in the 1970s. However, in the 1980s, an endowment was created that used donations and investments from individuals to fund the hospice facility.
At question currently is whether the funds being held by the endowment can be attached by creditors involved in the business bankruptcy of the corporation. Currently, the endowment is protected from the multitude of creditors left by the corporation. However, as creditors attempt to make claims to the funds still retained by the endowment, a bankruptcy court may be asked to decide if the two businesses that had been run together for many years must are equally responsible for the same debts.
Running parallel businesses in New Jersey can lead to issues similar to those in this business bankruptcy case. When business owners use the funds from one entity to help pay for another, the businesses may become intertwined. If that is the case, it may be necessary to seek court intervention, should one of the business ventures fail and file for a business bankruptcy. Before filling, a business owner may benefit from a careful review of the rules surrounding the bankruptcy process.
Source: UTSanDiego.com, “Hospice endowment not mixed in with bankruptcy,” Jeff McDonald, March 12, 2013