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Business Debt/who assumes the debt?
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Question
Hi Christine- I work for a hospital that defaulted on a loan given to us by the state (for repair, upgrades, old debts, etc). The hospital was then "taken" by the state b/c of the default.
There are several creditors asking for payment on debts that occured BEFRE the state took over the facility. Who is technically responsible to pay these? The old management company? (who is already in default big-time with the state) or now the state, even though the debt incurred before they "owned" the hospital. This debt in particular involves a signed contract. Please help!
Dear Amanda:
Thank you for the inquiry. When you say the "State" has "taken" over the business entity, it is unclear if they did so to liquidate assets, place in trustee or receivership. If a loan was government guaranteed (typically SBA type) most have a right to offset a default by doing the above to help satisfy the loan balance. If there were other creditors that were shorted or not satisfied as a result of a senior lenders actions, than that must be addressed by your executive management or legal counsel. If the hospital did not file for bankruptcy protection, most of the old debts would likely still be "out there" and remain collectible under your states statute of limitations. Albeit in most cases unsecured creditors can only attempt collections through certain measures, the most serious include the possibility of suing the debtor for judgment, then trying to collect on that. The hospital being the primary debtor, should address all liabilities and determine its responsibility with advice of counsel at this time. You as an employee, should not have to make such a serious and critical determination. If someone is trying to collect from you, or saying you are a "guarantor" (i.e. you signed on behalf of the hospital for a vendor contract), that still does not mean you stand to pay the debt, but would also advise legal counsel if they persist. Bottom line, don't go this alone, get to the highest level of fiscal management in your organization and pass this info off to them. Hope you find this answer helpful, and appreciate any positive rating or comment so others may benefit as well.
Respectfully,
Christine Janklow
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Answers by Expert:
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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