Legal Question in Business Law in Washington
business sale
we sold a business to someone who also borrowed money from a bank. we signed a subordination agreement with the bank in regards to all the equipment we sold them--name removed--The new owners have filed for bankruptcy. What should we do now ? Should we first contact the bank? Their lawyer? Do we have any rights or is it over for us--name removed--In our business sale contract, they were to pay us interest only on the sale price for a total of five years at which the balance of principle and interest would be due. They gave us a down payment and have made interest payments for 19 months. They have not made interest payments since Oct. and filed for bankruptcy in Jan--name removed--Any advice would be greatly appreciated--name removed--Thanks
2 Answers from Attorneys
Re: business sale
Before contacting the bank look at the agreement that you signed, this should determine what steps you should take,i.e, calling the bank, the buyer's lawyer, etc. In addition, look at the agreement between you and the buyer to determine your rights in case of default - non-payment of agreed interest would be a breach. Since you are owed money you should also make a claim in bankruptcy court.
Re: business sale
I would urge you to consult with a bankruptcy attorney. I don't like to respond to every lawguru question with a knee-jerk "get an attorney", but in your case, that is my best advice. Bankruptcy laws are byzantine, and you have to be careful that you don't violate the prohibition against making any collection efforts against the debtor. A good bankruptcy attorney would be able to tell you how best to protect your interests without running afoul of the laws yourself.
Good luck!
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