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Business Debt/Single Member LLC Dissolution and outstanding SBA loan debt

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Expert: - 1/30/2011


Question
I am a single member LLC, which I use for my freelance production work.  I filed for a Chapter 7 bankruptcy as the majority of my debts are business related.  I am still awaiting a discharge, but have noticed that all debts have disappeared except for one SBA loan, which I owe about $50,000 on.  I plan to dissolve the LLC and have some assets left, mainly equipment, which total worth is about $10,000.  The only thing is the SBA loan has a personal guarantee on it, but besides this equipment, I don’t own anything of real value (no house, car, etc.).  The SBA loan does have a lien on the equipment though.

Assuming the discharge is granted, this should discharge my personal guarantee for the loan.  So that leaves the LLC with the debt amount along with its equipment assets.  Is there any way of retaining the assets before dissolving the LLC or do these have to be liquidated first?  Also would the $50,000 owed from the LLC dissolve with the LLC once I formally put the dissolution in place with the state?  Am I correct in understanding that with a personal discharge from the Chapter 7 bankruptcy, there would be no more personal guarantee from me and they can’t come after any of my personal property (which really isn’t much anyway)?

Answer
Mike:
Thank you for your question. Your situation is common and needs professional advice. I am able to provide some insight but advise that you should review your options with your bankruptcy attorney. Typically when someone places collateral on an SBA loan, the assets placed must be liquidated to offset the loan balance by the lender before any potential discharge or debt forgiveness can be achieved. If you intend to do an Offer in Compromise to get rid of the remaining debt, this must be done after the business is closed. If you intend to remain open for business, than it may be possible to get a modification, but would advise professional help with this. If you end up needing help with this, my company SettleSource has a commercial loan modification program and negotiators that specialize in SBA workouts - feel free to reach me through the website that appears on my AllExperts bio. Hope this helps.

Respectfully,
Christine Janklow

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Christine Janklow

Expertise

As President of SettleSource,Inc. a business debt settlement firm, I invite you to inquire about all aspects of business debt solutions to best determine which may be most appropriate. If you have questions such as: What is debt settlement and how process provide debt relief to my business? What options are available to deal with my business debts? Is it possible for a business owner to negotiate their own settlements? Why is debt settlement preferable to filing a bankruptcy or debt consolidation? Why are creditors willing to provide settlements to a business? How will settling debts affect credit scores? or How to rebuild a business after debt is eliminated. Please ask it now! For more information regarding how debt settlement can help your business, please visit www.SettleSource.com and place your inquiry. Mention All Experts to have a confidential no cost consultation with Christine. If this is your business situation time may play a very important factor in getting matters resolved proactively before they have negative affects on the business.

Experience

My expertise is specific to providing business solutions that will have profound positive impacts on the financial health of businesses. I have 25 years experience as an entrepreneur and have developed national sales programs; strategic alliances; product development; marketing programs; business and turnaround plans and debt settlement programs all providing methods to improve the financial outlook for large and small businesses. In the area of commercial debt settlement I have over 10 years experience working with large and medium corporations and closely held businesses to enable successful debt reduction and turnaround. I am a professional debt arbitrator and have negotiated with major banking institutions as well as vendors, suppliers and other trade creditors.

Organizations
Provisors;Turnaround Management Association; Los Angeles area

Publications
Accounting Today; Web CPA; National Restauarant Association;Los Angeles Daily News; Today Magazine Monthly series of business articles entitled "Brand News."

Education/Credentials
Bachelor of Business Administration; Associate of Arts Merchandising

Past/Present Clients
American Airlines, American Express, Safeway Inc., New York Life, consumer products manufacturers; retailers, food service industry and other small businesses and service providers.

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