Board Topic: Trying to sell my business
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Trying to sell my business

Posted by: Richard50 Oct 22 2003, 08:45 PM
Hi. I'm trying to sell my small C-Corp(PA) because we got in a financial bind. I need to sell it now or it will cease to exist. We are in very bad financial shape. I have buyers that are willing to assume the necessary liabilities so that they can get the assets free and clear. I am essentially, giving them the business and in turn, they will lease the building(which I own personally).
However, there are two corporate unsecured loans that they will not assume. One is a $50,000 line of credit from Wells Fargo and the other is a $50,000 line of credit from a local bank. If I were to assume these and add them to my building, and then refinance, I will just break even. Therefore, other than saving everyone's jobs(which is very important to me), there is no reason to do this.
I have put all of my personal wealth into the business(through personal loans) and now have a negative balance on my personal financial statement. I gave over $60,000 over the last year while I worked but took no salary. Also, there is about $30,000 in business credit card debt.
Unfortunately, since I gave everything that I had, my personal credit cards also increased to about $30,000.
Other than that, everything is fine. Seriously though, is there a better way to structure this deal with the buyers other than requiring more money? Could my corp. declare bancruptcy and then be sold to the buyers?
On another note, I may be taking legal action against the corporation's bank. I know that it's a tough business world out there and I play a very good devil's advocate. However, the bank has been decietful and has accumulated a number of unfair business practices. I know that they have deep pockets and come under fire quite often. But, I believe that they crossed the line on numerous occassions. This cummulative effect pushed me to sell my company.
Any help would be greatly appreciated. Thanks in advance.
I'm forgot to add an important note: I believe that I (not my wife) have signed a personal guarantee for both $50,000 loans.

Posted by: loanuniverse Oct 23 2003, 10:02 AM
Richard:

Here is my feedback:

Seriously though, is there a better way to structure this deal with the buyers other than requiring more money? Could my corp. declare bancruptcy and then be sold to the buyers?
Whenever someone asks me for advice about bankruptcy, I get a knot in my stomach. You must! Let me make this clear: You must! consult a local bankruptcy attorney that specializes on Small Business Bankruptcies.

My knowledge of bankruptcy law is superficial, but I can give you the following feedback, which can be used as talking points with the bankruptcy lawyer that you are going to consult:

- Most of the business debt is probably secured by you {need to check all the documentation}
- The business going bankrupt will probably not shield you from the lenders going after you personally.
- Who owns the commercial building? {talk to the attorney about the lenders coming after this asset}
- Talk to the attorney about how your personal residence is protected in case your business or yourself have to go bankrupt.

You also asked about how to structure the sale of the assets other than requiring more money. Of course, you must be aware that you don’t need to sell the business and just sell the assets {all or part}. The problem with doing that is that if the business is forced to seek bankruptcy protection later, then the creditors {under some circumstances} can try to get this asset transfer reversed. {you need the advice of an attorney on all of this}. Also take into consideration that while the two lines of credit are according to you “unsecured”, you might have sign something called a UCC filing that might give those creditors some claims against those assets {once again, the attorney would know if you could sell the assets without getting in trouble}.

On another note, I may be taking legal action against the corporation's bank. I know that it's a tough business world out there and I play a very good devil's advocate. However, the bank has been decietful and has accumulated a number of unfair business practices. I know that they have deep pockets and come under fire quite often. But, I believe that they crossed the line on numerous occassions. This cummulative effect pushed me to sell my company.
Lender liability? What could they have possibly done? Banks really try to have all the bases covered when it comes to the documentation and the handling of lending relationships. Did they refuse to renew a facility? Refuse to advance? You will also need to talk to an attorney about this.

I'm forgot to add an important note: I believe that I (not my wife) have signed a personal guarantee for both $50,000 loans.
That is great, but how will she be affected if the lenders force you to file personally?

Hope this helps

Posted by: Guest Oct 23 2003, 06:07 PM
Thank you very much for the information, I really appreciate it. I am talking to an attorney who specializes in bancruptcy. Things have really changed today. The buyers will only buy now if the company declares Ch.11.
They are a group of very savy business people and attorneys. I know that I need representation but really can't afford it-I'm getting it though. I really am trying to avoid bancruptcy and it's taking its toll.
The buyers will rent from me(I own 100% of the building) but if I end up assuming additional liablities, I will end up breaking even. I see no point in this.
I will probably end up declaring for my company AND personally unless I can get the buyers to assume all of the liabilities.
I've been through this bargaining process a few months ago. I know the buyers idea is to make it appear as though the company is worthless. However, I don't think that they would still be interested if this is the case.
I would really like to be on the outside of these types of negotiations and decisions as I understand both the financial side AND operational side of small business. I know that I'm straying from my original question but I also need to look for a job. The only good thing out of this is the experience that I've gained in addition to my previous years on the job.
I know business but unfortunately, I am not an attorney. Anyway, Thank you very much.
Sincerely, Richard

Posted by: jim m Oct 24 2003, 05:23 PM
good luck, i hope things turn out well for you.
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