Legal Question in Bankruptcy in New York

Reorganization of the company

I am a real estate developer. I took construction loan of $30 million from a commercial bank and $5million from a mezz lender. Both the loans have personal guarantees.

We started construction and have borrowed around $15million from the commercial bank and $5million from the mezz lender.

Construction got delayed due to reasons beyond our control. The market conditions changed and both the commercial lender and mezz lender have started a legal action to collect money.

Question: can we take the company through reorganization or any other legal action without declaring personal bankruptacy?


Asked on 5/30/08, 11:12 pm

1 Answer from Attorneys
Nancy Delain Delain Law Office, PLLC

Re: Reorganization of the company

With the personal guaranties, the creditors have the right to go after your personal assets if the company defaults on the loan (that's why banks usually insist on personal guaranties), and most loan documents define bankruptcy as an automatic default on a loan, even if a Chapter 11 plan calls for a 100% repayment. Therefore, unless you're personally able to handle the business debt, personal bankruptcy may be looming in your future.

Hire the bankruptcy attorney now; this is a complex matter that you should not try to handle alone. Also, the attorney may be able to help you work with the lenders to structure the debt so that you don't end up personally in bankruptcy after the business bankruptcy.

Good question!

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.

Read more
Answered on 5/31/08, 12:19 am


Related Questions & Answers

More Bankruptcy Law questions and answers in New York