Expert: Norma Duenas - California Bankruptcy Attorney - 3/10/2010

Question
We are in the process of filing Chapter 7, married filing jointly. We have interest/ownership in 2 companies(an S-corp and a C-corp) and have listed our ownership in each on Schedule B. We are reporting the value of the stock at 0 because it has no saleable value at this time, neither company has any property and they are not making any money. Is this the right way to do this or should I give the company with minimal cash flow a valuation based on cash flow..say 5 time net or something like that? Thank you for your help.

Answer
You do not need to give it a valuation based on minimal cash flow. Generally the valuation of corporate shares is based on the marketability of the shares, net value of corporation assets, and your percentage interest in the corporation. Based on this valuation if the shares would be worth $0 then you would list the valuation as such in the bankruptcy petition.

If you need further assistance you may email me at norma@socaladvocates.com