Thank you for your response. I have not filed for bankruptcy yet, but will need to soon. The LLC was formed with my business partner and had no relationship with the later C Corp which was formed with my 401k rollover. The LLC had obtained an SBA loan that my partner and I both signed personal guarantees on. Our business was failing, we fell behind on payments on the loan and the bank urged us to close so we did. Hence my business partner filed for personal bankruptcy and discharged his debts.
The C Corp was created thru a 401k rollover of my past employer in which [the company] contends is completely legal and exempt under ERISA law. However, as I read, there are so many blogs saying the assets of the C Corp are not exempt and others that say there are. The C Corp itself has zero debt and is not filing. The "qualified profit sharing plan" stock owns 99% shares and myself and wife own 1% share. My understanding is that it is a separate entity that my wife and I are employees of. Ive talked to lawyers in my area who believe I was scammed by setting this up, I cant see this and other companies doing these plans if they werent legal.
The issue for me is, whether a Bankruptcy Trustee will find the C Corp assets exempt or as personal assets that will be liquidated and sold. I am having trouble finding a TAX/ERISA/BANKRUPTCY lawyer that has knowledge of all 3 as it is apparent that most of the consumer bankruptcy lawyers only want the simple black and white cases and shuttle you through their office like cattle. Not many attorneys are familar with Rollovers for a Business Startup Plan (ROBS)
this is an exerpt of some of the stuff I read:
Asset Protection for Owner-Only Plans
Any plan that is classified as ERISA will be protected inside or outside of a bankruptcy proceeding. However, if a retirement plan benefits only the owner of the plan and their spouse, it is not considered to be an ERISA plan and it will not qualify for protection. In a bankruptcy proceeding, owner-only plans are not at risk. If there is no bankruptcy proceeding, the plan will still be protected if non-owner participants are added to the retirement plan. This means that if you add other participants, the plan is no longer owner-only and it will be protected. This is one of the best ways to protect any owner-only retirement plan.