Bank is making offer, but not sure, please comment.

[justasking]

Actually, this relates to my situation right now ... I'd love to hear everyone's comments and perspective on this.

Bank is reportedly preparing an offer to term out business loans and attach a third mortgage to the loans.

Current bank loans do not have mortgage attached ... we will be paying off small SBA loan to get satisfaction of mortgage.

We have not seen the offer yet but we are fully prepared to go into Chapter 11 to reorganize business. Advantage of Chapter 11 is to reduce not just these bank loans but also Business CC debt.

Business is viable and looks better for next several years. Money will be tight, but it is doable ... and by end of 2011, 2012 will probably be soundly back in its feet.

So what do you think? How good does bank's offer have to be to make it a better option than a Chapter 11?

Related thought ... if I had to choose between Third Mortgage and personal guaranty on defaulted loans with $$$ still due after Chapter 11, which way is the best way to go?

And how do I decide?

All comments very much appreciated.

[HHM]

I moved your post out of the other thread since it was not really related to that threads context.

The first cardinal rule of resolving debt
1. NEVER turn unsecured debt into secured debt. Which it sounds like the bank is wanting to do. So, IMO, the deal is a non-starter.

[justasking]

OK but in fairness, the business assets did secure the previous loans. And they have scheduled a Summary Judgement Hearing to go after our business assets. We'd just like to stay in business.

They wouldn't get much if we move into Chapter 11 ... but it would be a big drain on time, credit, funds if we go that route -- and it might hurt our credit status with some of our vendors.

On the other hand, how do a negotiate with them that we'd like the new term loan without the mortgage? After 2009, our BS took a serious hit as we essentially funding the recession off our balance sheet ...

Then of course, there is the impact of a Chapter 11 on our personal CC's and finances. And no one can tell me how much a Chapter 11 would affect my personal finances.

So the cardinal rule sounds like a very sound rule -- is it the best way to deal with a business loan too?

Just playing devil's advocate a bit here ...

[justasking]

We have decided to counteroffer in part with the third mortgage off the table ... and see what they say. Still trying to work out other details.

No other thoughts or comments here?