Should we file?

My husband and I are the owners of a subchapter S corporation. We purchased our equiptment with a SBA guaranteed loan (they guarantee 80%) through a local bank. The business is failing, and we've decided to call it quits before we lose any more money. We would like to liquidate the equiptment and pay off the loan, but the bank is talking about seizing all assets, auctioning them off, and then continuing to collect from us any remaining balance. (An auction sale of assets would probably not cover the remaining balance.) What do you think? Can they do this? Should we file bankrupcy to protect ourselves? Doesn't the SBA guarantee give us some protection? We also have a lot of other debt related to the business--more than the assets can cover.

Thanks

[I AM ALWAYS LIABLE]

<BLOCKQUOTE><font size="1" face=" Arial, Verdana, Helvetica">quote:</font><HR>Originally posted by DavSon:
My husband and I are the owners of a subchapter S corporation. We purchased our equiptment with a SBA guaranteed loan (they guarantee 80%) through a local bank. The business is failing, and we've decided to call it quits before we lose any more money. We would like to liquidate the equiptment and pay off the loan, but the bank is talking about seizing all assets, auctioning them off, and then continuing to collect from us any remaining balance. (An auction sale of assets would probably not cover the remaining balance.) What do you think? Can they do this? Should we file bankrupcy to protect ourselves? Doesn't the SBA guarantee give us some protection? We also have a lot of other debt related to the business--more than the assets can cover.

Thanks<HR></BLOCKQUOTE>


My response:

You cannot sell something that doesn't belong to you. If you look at your SBA loan papers, the bank retains an equitable ownership interest on all equipment, etc., that was purchased for the business using those funds.

I would talk to the bank, and tell them your plans, ask permission, and show them comparables for sale of similar equipment, and that you believe, with that evidence, you can pay off your loan. But, don't hold your breath.

Insofar as a suggestion for you filing BK, you haven't stated what your income and expenses are, or what you have in the way of the total debtload. It would be far more efficient if you took all of your business and personal account books to a BK attorney for an in-person conversation.

IAAL


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