Legal Question in Landlord & Tenant Law in Michigan
Commercial Sublease/bankruptcy
Situation: I signed a 5 year lease on a commercial office. After a year or so I decided to sell the business. I sold the business and subleased the office to the new owners. I was a sole proprietor and the new compnay is a LLC. It has been a couple years now and I just found out that the new owners were closing their business and filing bankruptcy. I am now being sued for the remaining amount left on the lease. A couple questions:
1)Is it really that easy to default on a lease if you are a LLC? You can just file bankruptcy and face no personal consequences whatsoever?
2)What are the legal requirments for proper communication to me about the situation? I was not notified that rent was behind or that the company had closed until I received court documents stating I was being sued.
3)If regardless of the previous questions I am still found to be liable and cannot afford to pay the amount I am being sued for, does personal bankruptcy aleviate me from the debt?
Thanks for any help/advice you can provide!
1 Answer from Attorneys
Re: Commercial Sublease/bankruptcy
An LLC will not be allowed to utilize the protection of limited liability if they were under-capitalized. Creditors in bankruptcy are allowed to pursue remedies so that certain debt will not be discharged. You can file a claim in bankruptcy so that you are notified of all actions.
In a typical sublease, the new tenants pay the original lessee and therefore, the original lessee would have notice of the default.
Finally, you can file for bankruptcy for debt relief and in typical cases discharge the debt on the commercial lease.
If you have further questions or concerns, please contact me via my website at www.lawrefs.com.
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