Filing for bankruptcy protection will not stop a foreclosure on property held by an LLC, even if it’s administratively dissolved. That was the Bankruptcy Court’s ruling in a recent Chapter 7 Bankruptcy case, In re Kimball. In this case, the 100% owner of an LLC let the Georgia Secretary of State’s Office administratively dissolve his LLC, presumably for not filing annual registration. Prior to a foreclosure on real estate held in the name of the LLC, the owner of the LLC filed for bankruptcy. He argued that because he is the 100% owner and because the LLC is administratively dissolved, the real estate is part of his property and protected from foreclosure by his bankruptcy. The court disagreed and walked though how Georgia LLC law does not provide him a sufficient property interest in a dissolved, but not terminated, LLC’s assets. Therefore, the foreclosure was not cancelled and the real estate is lost.

If you own an LLC and are considering bankruptcy, be careful to remember that the LLC is a separately legal entity, even if it has been administratively dissolved.