Personal Bankruptcy My LLC is out of cash, may need to close doors

[vin_]

Hello,

My LLC(I'm one of two officers) is out of cash and I need to close the doors. Granted, I personally have more cash, but I simply do not want to put any more money into the LLC. Its simply a matter of not following bad money with good money.

Here's the problem:

We are tied into a lease for another 13 months. The lease agreement states that if we close the doors the leasor can get the assetts of the business. If I close the doors of the LLC, am I personally responsible for the lease?

What if the LLC files bankruptcy?

Thanks for the help.

V

 

[Michael Wechsler]

My LLC(I'm one of two officers) is out of cash and I need to close the doors. Granted, I personally have more cash, but I simply do not want to put any more money into the LLC. Its simply a matter of not following bad money with good money.

Here's the problem:

We are tied into a lease for another 13 months. The lease agreement states that if we close the doors the leasor can get the assetts of the business. If I close the doors of the LLC, am I personally responsible for the lease?
What if the LLC files bankruptcy?

Much of your personal liability will probably come down to what is written on the lease - did you guarantee the lease personally? It is not unusual for lessors to require this simply to deal with a situation such as what you present.

There is also another issue and that is the disposal of the assets of the corporation. You cannot simply take the assets home while declaring bankruptcy at the same time. Your petition will not be granted. I'm sure the lessor will also probe into the situation if you try something like this or just close up your doors and move out.

Perhaps you'd do better by telling the lessor that you will be closing the doors of the corporation since the liabilities have driven the business into the ground and there is no money to pay the debts of the business. Perhaps you can settle on early termination terms which will also give the lessor the ability to find a new stable tenant. The alternative is to try to squeeze blood from a stone... Good luck.