Legal Question in Bankruptcy in Florida

A close friend of my asked me to partner up with him in a business venture 2-1/2 years ago, he also needed my guarantee on a mortgage note and a seller note involved in the business purchase. In return for my guarantee I would get 32.5% of the company stock.

Needless to say, things have not gone well over the last 2 years and our business is seriously suffering. We are making our payments on all debts, but are regularly unable to pay ourselves. We have began looking at the option of closing the business or filing bankruptcy.

In the process of going through our paperwork, it has been discovered that the lawyers did not file the paperwork right and I, in fact, have no shares in the company. I am simply an employee with a guarantee on about 180K in debt.

If we do file bankruptcy will the creditors still come after me even though I had no consideration and no knowledge of this? Only reason for me to sign an guarantee was to have ownership in the company.

What can I do to protect my family assets?

Thanks


Asked on 3/05/10, 6:27 pm

1 Answer from Attorneys
Robert Wilcox Wilcox Law Firm

The liquidation or reorganization of the company will not help you on the guranty issue, unlless the bank is paid in full. Even then, under most guaranties the bank does not need to exhaust its remedies against the company before proceeding against you.

You need to schedule an apointment with an attorney who understands both the corporate issues, and who also may be able to help you protect your assets. It may be two different people.

You might have an argument that your guaranty is not valid because of lack of consideration in that you did not receive the shares. It's a long shot, but you may be able to make the argument to the bank that you were defrauded in the deal, and use that is a sort of equitable defense. At worst, you should be able to negotiate your guaranty liability down.

Keep in mind that you the guaranty is likely an unsecured debt for you, unless you pledged your personal assets as security. Unbsecured debts can be discharged in bankruptcy, if that becomes necessary.

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Answered on 3/11/10, 6:31 am


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