Legal Question in Bankruptcy in California

Re: Corporation and personal guarantee

The purpose of the personal guaranty is to allow the landlord to side step the corporation and collect directly from you if there is a default.

I suggest you go see an experienced business attorney immediately for advice. Maybe the guaranty has some kind of legal flaw that you can take advantage of to wiggle out? If all else fails, you can have your lawyer negotiate with the landlord and try to "buy you out" of the lease, by paing money to the landlord up front to allow you to terminate.

I hope it works out for you.

Re: Corporation and personal guarantee

As attorney Bayer correctly points out, you are going to need to consult with an attorney, or even possibly more than one. With respect to the lease agreement, you are going to want to consult with a business or real estate attorney who can review the guarantee and determine what your potential exposure is. Secondarily, you need to look at the lease for the potential of sub-letting the property to someone for the balance of the lease. You will still be on the hook (inless your attorney can negotiate a full release in the process), but at least you can reduce your monthly losses. Finally, you need to consult with a bankruptcy attorney. Depending upon the size of your business, you may be able to file a chapter other than an 11, and obtain a co-debtor stay preventing legal action against you personally. Personally, you are probably not a good candidate for bankruptcy given your asset level. If you do nothing, I think its pretty clear that all but your fully qualified retirement vehicles (401K, etc...) and to the extent that your assets might be exempt from collections, everything you own is subject to the landlord's collection efforts. I would strongly suggest that you consult with someone very quickly before you get much further behind. That same attorney or attorneys can also work to negotiate a settlement with the landlord if none of the foregoing options is available to you.

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