Legal Question in Bankruptcy in Maryland

LLC bankruptcy filing, Chapter 11

There are 2 partners in this LLC. One partner borrowed from his family trust to purchase his interest in the LLC. Today we found out that he is also a beneficiary of the trust and is listed as one of the lenders on the note. He is a borrower and lender in the amount of $40,000, his father, and 2 other relatives are the beneficiaries/lenders of the rest in different amounts. He, with my permission, used the 2 LLC properties (only assets) as collateral for his personal loan. He would never let us see his Note nor give of the terms of his loan. I got a copy of the Deed of Trust securing the Note from public records. He defaulted after only two payments. He and his family members have called the Note and are foreclosing on the properties on 7/26/99. We just got a copy of the Note from the foreclosure attorney who is also a personal friend of our defaulting partner. His loan amount is $120,000 secured by the LLCs 2 properties valued around $300,000. May I file Chapter 11 without an attorney? Once we retain an attorney, do we have a claim against this partner and his father? After reading the terms of the Note, I believe they had planned to get this property in this fashion from the very beginning.


Asked on 7/13/99, 1:34 pm

2 Answers from Attorneys
Susan Freiman The Legal Clinic

Re: LLC bankruptcy filing, Chapter 11

You absolutely must get a lawyer. This is much too complicated to try to handle on your own. You are liable to lose everything.

Dan Press is an outstanding lawyer - knows a lot about bankruptcy law, and he cares about his clients.

Good luck.

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Answered on 7/24/99, 4:43 am
Daniel Press Chung & Press, P.C.

Re: LLC bankruptcy filing, Chapter 11

You probably do need to file Ch. 11 unless you can get the foreclosure enjoined by the state court (doubtful, but not necessarily impossible). You need an attorney - an LLC can't appear in court without one. We practice bankruptcy law, as well as real estate law and litigation, in MD, and have substantial Chap. 11 experience. Feel free to call or e-mail me.

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Answered on 7/16/99, 6:51 pm


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