Keep or shutdown LLC?

[screentest]

Hello all, Thanks again for all the help this board provided. I am hoping I can get some advice on my LLC situation.

I own a small advertising franchise and I established an LLC a year after I purchased the franchise. I currently operate under a franchise agreement that makes me personally responsible for the debt of the business to the franchisor.

The LLC covers me for everything else. Problem is the business does not make a profit. Last year I took a 25k loss as the economy tanked and what little business I had was not enough to cover operating expenses.

I am filing personal chapter 7 and I don't know what to do with this LLC/Franchise. I currently owe approximately $12,500 to the franchisor and I am still out selling as hard as I can. I have one employee. Advertising sales are much better this year than last so far. I have enough in accounts receivables to cover last years debt; however' I will not have enough for operating costs this year unless sales continue to grow rapidly.

My plan was to get enough accounts receivable and collected to get my franchise to a $0 balance and then either sell it (I have two interested parties) or close it.

My attorney's are telling me to close it now and include all the business debt in my BK so it goes away. If I can get it to a $0 balance I may be able to sell it in January for enough to cover some of my huge loss. Right now on the schedules it has $0 value because it is in debt and has never shown a profit on P&L.

I know the trustee will evaluate it for any value. Is it true the trustee will take any accounts receivable? If they do take them then those accounts receivables customers will immediately become creditors as I have not delivered any advertising product to them yet. We only publish once a year and the product comes out in December. (Similar to a yellow pages book)

My clients include cities, chambers, high profile political folks, large and small chain corporations etc. There are going to be some VERY irate folks out there if I have to shut down on them. I am very uncomfortable in this situation. My attorneys say Hey, this is just business but they don't have to look at my clients in the face like I do.

So advice from those that know. Would you keep pushing ahead and try to get it profitable and/or at least cover the business debt or just close it, take the huge hits and walk away? We don't file for another 4 weeks.

Thanks
ST

[frogger]

My attorney's are telling me to close it now and include all the business debt in my BK so it goes away.
ST

That's some excellent advice right there. Couldn't have said it any better myself.

[screentest]

Thanks Frogger,

I think I have been in denial for too long. I keep thinking just one more month, just one more quarter and I may make something of this. I have known the answer for some time, I just needed to see it in print I guess.

The business has cost me over 100K to keep afloat and I have an account balance of $-37.00 Hows that for success? This venture was my last attempt at avoiding BK. It just isn't going to happen.

I think I will take some more of your advice and enjoy a jack and coke tonite!

ST

[frogger]

I think I will take some more of your advice and enjoy a jack and coke tonite!

ST

Been in your shoes, got the scars to prove it. Sometimes you just have to get over that "pride thing" and understand that the situation has just got out of control.

Once you decide to take control of your life and your finances again, it will be such a great relief, you're going to start kicking yourself and asking why did you wait so long.

Been there, done that, got the boot marks on my a$$ from where I've kicked myself.

Let go, start again, and live life. Sit back and enjoy that Jack and coke.

[justasking]

Another thought I had was that yes, you own this franchise.

And you are providing a service to this businesses, orgs, chambers, etc.

Can you not do that after you close the biz and file bankruptcy without this franchise?

I mean, is everything you are doing for them 100% tied to the franchise.

I think you also need to realize that as a biz owner to biz owner, we know it's been tough on everyone. If you really have a pride issue to take care of ... it would be -- how to make sure you delivered as much of the value they paid for before you close.

Don't take on anything new that you cannot finish. Finish what you can. Close biz, file and then figure out how to start up again ... even if it is as a freelance consultant / sole proprietor.

HTHs