Legal Question in Real Estate Law in Arizona
Our LLC is 16 months into a 36 month lease and experiencing severe financial difficulty that may force us to shut the doors March 1st. We personally guaranteed the lease for one year (expired). The LLC is technically insolvent and all members are funding it through personal income, but getting tired of throwning money at a bad situation.
As noted:
We are formed as an domestic LLC
members, no manager
Guaranty expired
about 1/2 way through lease term
Company insolvent
What are the landlord's options to get to us personally? Will we have to BK the business or simply close the doors? What options do we have? I'm sure I will need a good BK attorney very soon, so please consider this a serious request.
1 Answer from Attorneys
Given that your personal guaranty has expired as you say, in order for the landlord to seek personal liability of the members, the landlord would have to prove that you did not observe the formalities of a separate legal entity and did not hold yourself out to the public as a limited liability company. This is the same concept a "piercing the corporate veil."
So long as you have properly acted and maintained the LLC, and did business as such, you should not be personally liable. Therefore, you should just terminate the business, windup and dissolve the LLC, as provided by the AZ Corporation Commission. I suggest that you give the landlord notice and arrange to surrender the premises to the landlord, after you have removed all of your property, and do not do any damage in the process. I don't know why you would have to consider bankruptcy protection under these circumstances.
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