Austin, TX asked in Bankruptcy for California

Q: Are zero-value stocks "assets" in a bankruptcy application (California)?

When I filed for bankruptcy 4 years ago, I had stocks that had zero value -- companies that went out of business. Since they had no value, I presumed they were not assets and didn't bother listing them. Did I, then, commit perjury when I signed the application that didn't list them, under oath?

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2 Lawyer Answers

Scott Jordan

Answered
  • Bankruptcy Lawyer
  • San Ramon, CA
  • Licensed in California

A: That is difficult to say. Perjury requires intent and you seem to not have the requisite intent, so probably not. The real issue, however, is whether your discharge could be removed for fraud. Had the companies gone out of business prior to your filing? If the answer is yes, then I would argue that the stocks technically no longer existed and therefore were not an asset. If the answer is no, since they subsequently went out of business, and I presume there were not distributions to shareholders made, they were assets with zero value. Since they had no value, the creditors were not harmed in their not being disclosed and you did not commit fraud.

Scott Jordan

Answered
  • Bankruptcy Lawyer
  • San Ramon, CA
  • Licensed in California

A: That is difficult to say. Perjury requires intent and you seem to not have the requisite intent, so probably not. The real issue, however, is whether your discharge could be removed for fraud. Had the companies gone out of business prior to your filing? If the answer is yes, then I would argue that the stocks technically no longer existed and therefore were not an asset. If the answer is no, since they subsequently went out of business, and I presume there were not distributions to shareholders made, they were assets with zero value. Since they had no value, the creditors were not harmed in their not being disclosed and you did not commit fraud.

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