Legal Question in Bankruptcy in Massachusetts

Coporate Chapter 7

My husband and I took a small business loan 5 years ago and my husband bought a liquor store. The bank took our primary residence as a mortgage on the note. Last year at this time, my husband became ill with a brain hemmorage and was out of work for some time. When he returned, his business has been pilfered by employees and he was unable to recoup his losses. He filed Chapter 11 because he had a person who was willing to buy it at the time thus reducing our debt.In court, in June, the judge ordered a Chapter 7 because our lawyer had not recorded the sale. Since that time the trustee has not been able to sell the assets of the store (liquor liscence, equipment, etc.)which they have valued at around $300K. The sale we had pending at the time we were forced into Chapter 7 was for $900K (we have a signed purchase and sale)which would have paid off the $500k we owe on the small business loan. Since that time the landlord of the liquor store is refusing to let anyone move in unless it is a large chain. The person who had the deal with us for $900 placed a bid of $750 at the public auction but can't move in because of the landlord. My question is, in light of this, can they go after our house if it is not sold.


Asked on 3/24/05, 1:58 pm

1 Answer from Attorneys
Barry Levine Law Office of Barry R. Levine

Re: Coporate Chapter 7

Unfortunately and without reading the loan documents, the bank can probably proceed against either the primary obligor (the corporation) or the guarantors. It does appear that a thorough examination of the landlord's conduct in this situation is in order. Was there a lease between the corporation and the landlord? Was it assumed as part of either the Chapter 11 or the Chapter 7? Did the Chapter 7 trustee attempt to assume and assign the lease to the prospective buyer? I would be pleased to meet with you and analyze the corporation's situation and how that will impact, for better or worse, on your situation.

Read more
Answered on 3/24/05, 2:59 pm


Related Questions & Answers

More Bankruptcy Law questions and answers in Massachusetts