Personal Guarantee Landlord / Equipment

[rebuilt]

If we have to file a non consumer CH7, and decide, and are able to keep our business going, will it be possible by adding them as creditors during the process that our personal guarantees would become null and void?

My concern is filing, keeping a business "I am pretty sure" will make it, and then for some reason it doesn't and I have a landlord and an equipment leasing company come after me for personal guarantees, but I have already used the bankruptcy card and am stuck with judgements anyway.

I am wondering if you have always been a solid tenant, and always paid the equipment on time, will they allow the personal guarantees to be removed, and let you remain in business with them; then if it doesn't work they are in no worse of a situation then if it doesn't work during the bankruptcy process as they would be left with nothing either way?

Trying to decide whether keeping a business going is worth it, or too risky, and should just start over?

Thanks a lot

[justbeach03]

Going through the same thing. If you are filing non consumer- ch7 Business is considered an asset and trustee will take your things...unless you get creative

[rebuilt]

Well, the business will / may be profitable in the future, but now just has a bunch of leased equipment in a store, so it is really a liability.

The secured debt is what the store is, without getting specific (let's use a gym as an example). If the entire gym had every piece of equipment with a lease on it with a much higher value than the stuff could be repo'd and resold for, what is there to take?

We have a great location, and the business is covering its debt load, but that is it for right now. In a couple of years, with the equipment leases gone, it will be quite profitable. The thing is, I don't want to file, and take a chance by leaving these personal guarantees in place, then it fails, and I am in the same situation without bankruptcy as an option. No matter what I want this to be the only time in my life I go through this anyway.

So, having said all of this, if the business is worthless to creditors (i.e. the euipment leasing company would take a bath, the landlord would take a bath) then what is there to take? If we have been responsible in keeping the business afloat even if other businesses, or personally we don't make it, can this separate business entity (LLC), survive a bankruptcy with negotiating out the personal guarantees on the equipment and the rental agreement? If not, I would just include it, and walk, and who wins there?

At least if they let me continue, there is a strong chance the business will work, continue to employ people, continue to pay rent to the landlord who would be stuck with an empty space, continue to pay on equipment that would otheriwse be nothing but a loss for the finance company. I just don't want a personal guarantee leftover if I file, otherwise, what is the point?

Any insight? Can my lawyer try to negotiate this prior to filing? Any help would be great.

Thanks

[frogger]

You're in a loosing situation here. When you bk, you're going to need to bk on the leases, which will get rid of the personal obligations.

The lenders/leasing companies however, will most likely not want to continue the business relationship.

If the business has profit potential, someone will want to buy it.

The trustee will want to sell it.......

[justasking]

How solid is your relationship with your landlord? Is it a big leasing management company or an individual?

Might be worth a conversation if easy to talk to .... things are tough out there and they know that. Money in the hand is worth more than an empty building, after all.

[rebuilt]

It is an individual, but it is a large plaza. That was my thinking too.

How about the equipment leasing company?

[justasking]

Do you have a relationship with anyone at the leasing equip co in authority? Are they local or national? Is your industry getting hit hard, that keeping you current and paying now is better than not ...

Have you always paid them on time, no issues? Is it a lot of $$$ or a long time left on the lease?

Are they are company that actually goes after personal guarantees? I realize that we all think they do ... but honestly, I don't know. Do they ever look at some situations and say for the legal fees, etc. , it's not worth the hassle, let's just let them walk ...

So how do they rate with these questions?? Do you think you have some negotiating room? If so, make sure you've got your story / arguement ready and prepared for objections / concerns. Cuz once you let the cat out of the bag, you cannot take it back ...

[justbeach03]

We have a great location, and the business is covering its debt load, but that is it for right now. In a couple of years, with the equipment leases gone, it will be quite profitable. The thing is, I don't want to file, and take a chance by leaving these personal guarantees in place, then it fails, and I am in the same situation without bankruptcy as an option. No matter what I want this to be the only time in my life I go through this anyway.

I guess I'm confused at what exactly you are trying to do. correct me if I'm wrong:
~ You want to keep the business (cause it potential will be profitable). You are able to pay the bills currently, but you want to file BK to remove yourself from being the personal guarentee. If this is the case- wait till the business actually fails and then file personal BK. Seems like you are putting the horse before the cart. Again, if you file now the trustee will sell your assets.

[justasking]

Yeah, I think he's right (justbeach03) ... if you don't need to file BK now, don't.

Sounds to be that you've made it thru the worst recession since the great depression and you are just still fearful that you might go under. I get that ... heck, just about anyone runnng a business right now gets that :-)

Just keep doing your thing to grow the business and see how it goes. That's the best you can do right now. And every month that you survive and make payments, is one less month of $$$ on the backside.

[rebuilt]

You guys hit the nail on the head. The business in question is separate from other businesses we have, however, that I just don't know if they are going to make it. So, since this one I think will make it is so heavily leveraged, there are no assets that aren't secured by the equipment leasing company. So, I am just worried about being allowed to keep it, and then it not making it in the future if I already used bankruptcy as an option to clear myself of heavy personal debt, and heavy debt from other businesses.

I do have a partner in the business in question, he is open to bankruptcy as well, but if he decides against it for himself for whatever reason, how will all of this affect him, assuming I decide to include this business in the bankruptcy?

[justbeach03]

ok- multiple businesses in a recession about to go into busy season and you're beat down and tired from the multi tasking a stress. What concerns me is that you're not paying yourself either. That was me! Working 60-70 hrs a week, missing family time (would hate to hear thats part of the reason for your seperation)...Opened 1 location right before recession and then manager stole from me while pregnant. I decided to get rid of 1 of the businesses and keep the profitable one. Now I still have a PG on the one that was sold,cause I couldn't sell it for what I owed. But it's our season now and have been able to pay myself from the biz that's open. Eventually the banks will come looking for money, then sue, then get a judgement and at that time I will file for bankruptcy. You have plenty of time to make a game plan if it does or doesn't work out...just make your money while you can & negotiate what you can't pay. Can you downsize to a manageable number to buy some time?

[rebuilt]

I know I will have to downsize. The work part is totally a major part of the separation. When times were good, I focused on work so much, and now that it is not so good, she isn't around because of how I acted then. It's been tough.

It's just a matter of what to downsize first. It will just happen as it does I guess. I know there is time, I am just trying to think well ahead. Just such correlation between the businesses that it seems like a deck of cards, and I am hoping some can stand.

[justbeach03]

I feel for you. It sounds like a sad situation on a personal and professional level. That's why I bailed out of the first biz- it was taking too much toll on the family. And like a deck of cards, my second biz will fold too...but I have the luzury of a husband with a great job. So I can be a stay at home mom and enjoy...once the BK stress goes away.

Just keep plugging away at what is working and dont spend too much energy on what isn't!

[jasymoice]

Perhaps it is not a problem because it has no value for you, however, your owner can call the local police if he thinks that you delete items of value. Do not local police expect to be involved in the night, or without a court order, however they are likely to simply order everyone to stop until they have the statement of the Court.