Legal Question in Bankruptcy in Illinois

HELP!!! THIS IS A TOUGH QUESTION. I have an building that was in chapter 11. We have 2 tenants: our operating company which is also in chapter 11 and can't make full payments but has survived over a year paying the Bank's portion, and a tenant that wants to buy the building and lease back to us. The case was dismissed because there is no equity and it's a single asset, and shortly after the bank sued for foreclosure. I owe the bank and the SBA, plus real estate taxes. My tenants offer only covers the Banks debt....so I'm left with the SBA and sizable property taxes.

My question is: If I put the building back into chapter 11 and sell the building to my tenants (with the Bank approval), make a settlement with SBA, can the taxes be stripped, like all other liens?

Thank you from....

Desperate in Chicago


Asked on 7/09/10, 6:32 pm

1 Answer from Attorneys
Adam S. Tracy Securities Compliance Group Ltd

Thank you for your question. This is somewhat complicated. Does the sba hold a lien? Assuming they don't, your best angle may be a short sale. The chapter 11 still may not work because you're unlikely to have the cash flow available to cure and pay the taxes - which will have to be dollar for dollar. My guess is the bank would never let this go to tax deed. Please feel free to email me for further discussion: [email protected]

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Answered on 7/19/10, 8:24 pm


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