Legal Question in Business Law in Illinois

Bank Business Loan

I have a loan with a community bank for my business. Original amount was 120,000 and now the balance is 66,000. The loan was structured with an escalating payment schedule now currently about 3 times the original payment. When I fell behind because of the larger payments last year, (the economy issues everyone is confronting) the banker gladly amended the loan and the payment schedule to meet my needs. Upon signing the agreement, I was told I needed to pay all of the past due interest. Although I didn't have the funds immediately, I paid the interest in two installments. The bank determined that I violated the new contract because the payment wasn't received on the date we signed the amended agreement. They are indicating that, if I do not pay the loan off in full, they may file a lawsuit in their best interest. I have kept up with the interest only payments, but did receive a letter from their attorney indicating they may file a lawsuit on behalf of the bank. I am working with a turnaround company and informed both the bank and their attorney that we are working on refinancing the loan. What can they do and how fast can they do it? They have a UCC1 on all of the assets. Please advise. Thank you.


Asked on 6/12/04, 5:42 am

2 Answers from Attorneys
Kenneth J. Ashman Ashman Law Offices, LLC

Re: Bank Business Loan

If you are in breach of the loan agreement, the bank may elect to enforce its rights. The real question is whether the bank wants to work with you, for if they demand immediate payment and your company neither has the wherewithal nor assets to satisfy the outstanding indebtedness, the bank may never get paid, for your company could declare bankruptcy or simply go into dissolution.

Facing this prospect, banks often will work with debtors to see whether revisions to the loan agreements are appropriate.

-- Kenneth J. Ashman; www.AshmanLawOffices.com; [email protected]; 312-596-1700

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Answered on 6/15/04, 8:28 am
Wilburn John Bingaman Bingaman Tax Service

Re: Bank Business Loan

My opinion on this is that when you informed the

banker that the full amount of the past due interest could not be paid in full, there should have been an addendum attached stating 1) the date(s) when it could be repaid 2) acceptance of

this date when it could be paid. Please understand that this is only an opinion expressed with the facts as stated by you. Other alternatives could be appropriate.

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Answered on 6/13/04, 10:26 am


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