Archive for the ‘Business’ Category
Sunday, September 19th, 2010
If you have been reading your local newspapers, you may be aware that Nathan Deal, the Republican candidate for Governor of Georgia, is facing scrutiny about his personal finances and about the bankruptcy filings of his daughter and son-in-law.
According to the Atlanta Journal-Constitution, Mr. Deal personally guaranteed bank loans totaling over $2 million that was used to build and finance a sporting goods store owned by his daughter and son-in-law called Wilder Outdoors, located on Highway 365 near Gainesville. Unfortunately for the Wilders, the sporting goods business failed, leaving about $2.5 million due. Mr. and Mrs. Wilder filed Chapter 7 bankruptcy in 2009, discharging their obligations on the outstanding bank loans, leaving Mr. Deal exposed as the guarantor.
Mr. Deal and the Wilders were able to refinance the business loan several years ago prior to the closing of the business but now, a $2.5 million debt will come due in February, which would be about a month after he takes office if he wins.
Mr. Deal asserts that his financial quandary is no different from that faced by many parents who offered financial support to the entrepreneurial dreams of their children. He has put his primary residence and other property on the market and no doubt hopes to generate enough cash to satisfy the bank's demands. You can read more about the Wilder bankruptcy issues on my Bankruptcy Law Network post about this situation.
Democrats are pointing to Mr. Deal's financial troubles as proof of his questionable judgment, especially since it turns out that Mr. Deal's son-in-law, Clint Wilder, appears to have been ineligible to file Chapter 7 in July, 2009. Mr. Wilder had filed an individual Chapter 7 case in Atlanta back in December, 2001. Section 727(a)(8) of the Bankruptcy Code provides that a debtor must wait at least eight (8) years from the time a Chapter 7 case is filed before filing a second Chapter 7 – here the time period between the two filings was about 7 1/2 years.
Although the Wilders' case was closed in December, 2009, the United States trustee has the right to reopen this case and petition the judge to revoke the discharge. From what I am hearing, this is what is happening now.
Candidate Deal correctly points out that issues relating to his son-in-law's bankruptcy are not his doings and should not be attributed to him. On the other hand, the Deal campaign has to be concerned about the prospect of a candidate who could very well be insolvent the month after he takes office and who could face the prospect of filing a voluntary petition or having an involuntary bankruptcy file against him shortly after he takes office. You may recall that former State school superintendent Kathy Cox chose not to run for re-election after she and her husband filed Chapter 7 following her husband's failed business deals.
I think that the main lesson to glean from this situation has to do with the inherent problems associated with co-signing a loan for anybody, especially when the money put at risk is more than you can afford to lose.
What do you think? Will Mr. Deal's looming financial problems cost him your vote? Or do his financial problems give him insight into the economic plight of struggling Georgians?
Posted in 2, 2009 , Business, Chapter 7 issues, Finance, Georgia Bankruptcy, Involuntary Bankruptcy, Loans, Nathan Deal, Revocation of Discharge-Section 727, a, and, bank, build, called, chose, correctly, cox, daughter, deal, failed, goods, guaranteed, guarantor mr, happening, hearing, ineligible to file Chapter 7, july, kathy, mr, now candidate, outdoors, owned, personally, points, recall, revocation of Chapter 7 discharge, school, son in law, sporting, state, store, superintendent, the, totaling, wilder, wilders | Comments Off
Wednesday, June 30th, 2010
Not surprisingly, I get calls from small business owners who are contemplating personal bankruptcy when their businesses fail. There are many issues that arise in these types of cases but I would like to focus on one problem that, more than any other, can force the business owner into bankruptcy.
Generally when the owner of a small business leases retail space, the landlord will demand a personal guarantee. This means, of course, that in the event of a default, the business (which may be a corporation or LLC) faces liability and the business owner personally faces liability.
Given this reality, every small business owner should seek counsel to discussion asset protection options before starting his business, but that is a topic for another day.
If the business fails you might be surprised to learn that the landlord does not necessarily have to take any steps to "mitigate damages" by releasing the retail space. Instead, the landlord can demand payment for the full value of the lease from the business owner personally. If the business owner has a house with $100,000 of equity, that equity is therefore at risk, and given that Georgia's bankruptcy exemption statute is stingy ($10,000 for an individual or $20,000 for a married couple filing jointly), bankruptcy may not offer much protection.
I ran across two helpful resources that go into more detail about the landlord's obligations or lack thereof. The first is a blog post from Atlanta lawyer David Pardue in his Georgia Real Estate Litigation blog. In his post, David discusses a recent Georgia Court of Appeals case called Sirdah v. North Springs Assocs., LLLP, which was decided by the Court of Appeals in June, 2010. In the Sirdah case, the Court restated its previous holding that a landlord is under no duty to mitigate damages unless (1) the landlord accepts the tenant's surrender, or (2) the tenant successfully terminates the lease. In the Sirdah case, the tenant returned his keys to the landlord and argued that by accepting the keys, the landlord accepted the tenant's surrender. The Court said that accepting the keys did not constitute an acceptance of the surrender.
Another helpful resource is a more extensive article written by attorney Stephanie Everett of the Bloom Law Firm in Atlanta. In this paper, Stephanie examines the various scenarios that could arise when a tenant breaches a lease and the resulting consequences. Although Stephanie's article is written for the benefit of landlords, tenants will find the information very helpful as well.
As the law in this area could change, you should not rely on these resources in the absence of counsel. If you are a small business owner and you are coming to the realization that your business may not survive, you would be wise to consult with a lawyer to discuss your options both in business and in terms of bankruptcy. I have seen far too many business owners who simply left and discovered after the fact that their bankruptcy options were limited, or too painful.
Posted in 1, Business, David Pardue, General consumer bankruptcy info, Georgia Bankruptcy, Protected property issues, Sirdah v. North Springs Associates, a, accepted, accepts, and, appeals, assocs, breach of lease, breaches, called, case, consequences , damages, duty, faces, landlord, lease, lease , leases, liability, liability given, llc, mitigate, mitigation of damages, north, owner, personally, resulting, retail, retail lease and personal liability, sirdah, small, space, springs, successfully, tenant, terminates, the, v | Comments Off
Saturday, June 19th, 2010
No one starts his or her adult life expecting to file for bankruptcy. Yet every week, I meet with men and women in their 30's, 40's, 50's, 60's and older who have become insolvent and need relief under the United States Bankruptcy Code. I often hear the lament "I never in a million years thought I'd be sitting in a bankruptcy lawyer's office." I usually respond by reassuring my clients that bankruptcy is a legitimate and legal financial tool that can offer hardworking families a kind of "do over" when unexpected circumstances finances to go south.
If this sounds familiar to you and you are struggling with the idea of finding anything positive from your bankruptcy experience, I would encourage you to take a few minutes to think about how and why you ended up in a bankruptcy lawyer's office. I would also encourage you to consider what you can do differently in the future to make your bankruptcy a one time event.
I also think it is important to recognize that you are by no means alone in facing unsettled financial times. You may have seen lists containing the names of famous historical figures who filed bankruptcy (like Walt Disney, Larry King, even Wolfgang Mozart). Now think about the tremendous change that we are all experiencing now. I recently ran across a blog called 24/7 Wall Street that issues a yearly list of companies or brands it expects to disappear in the next year. This year's list includes:
- Readers Digest magazine
- Blockbuster Video Stores
- T-Mobile cell phone carrier
- Merrill Lynch stockbrokers
- Radio Shack
- Zales Jewelers
- Kia Motors
Now, I fully expect some of these brands to survive, but I am also certain that one or more may go away.
Other well known brands that 24/7 says are in trouble include:
- Newsweek
- Eastman Kodak
- Motorola
- Palm (smartphones)
- E*Trade (discount stock brokers)
I am sure that you have heard of many of these companies, and if you think back, most of these businesses were thriving, dominant concerns run by experienced executives from the finest business schools.
The point here is that anyone, and I mean anyone, can get into financial trouble quickly. Just the other week, for example, I met with two men about bankruptcy, each of whom formerly earned over $1 million annually.
Bankruptcy is certainly not a good thing to experience but in our economic system, a bad decision or two and an unexpected change in the business environment (think about those shrimpers in Louisiana) and there you will be – sitting in a bankruptcy lawyer's office.
Posted in Business, General consumer bankruptcy info, Stock, bankruptcy and personal failure, brands, brokers, carrier, cell, companies, discount, e trade, eastman, famous, famous people who filed bankruptcy, figures, finest, historical, kodak, motorola, newsweek, palm, phone, point, psychology of filing bankruptcy, schools the, smartphones, survive, t mobile, the | Comments Off
Tuesday, October 13th, 2009
Black Book Data asked: You just graduated from law school and are now ready to make money while helping people resolve their legal problems. You decide that you will partake in the bankruptcy niche, since that area of law seems to be in high demand, especially considering all the foreclosures that are happening. You put some ads in the paper and acquire a few clients. But you want to get more without breaking your budget. The best way to do this is to look into buying bankruptcy leads.
What are bankruptcy leads and how do they work? Bankruptcy leads contain information relating to people who are considering bankruptcy or may have already filed bankruptcy. The latter won’t do you much good unless you’re offering a service that can help rebuild credit. So, your best bet involves looking into the first option, which allows you access to ‘true’ bankruptcy leads. These are the individuals that are basically ready to file bankruptcy to avoid legal consequences, whether it’s a lawsuit, wage garnishment or foreclosure.
Bankruptcy leads can come in a variety of forms, ranging from a list of emails to a collection of addresses. Most companies offering bankruptcy leads tend to provide them in the form of addresses, since there’s a lot of controversy surrounding bulk email campaigns. This means that when you build up your bankruptcy mailing list, you’ll probably have to use direct mailing to advertise to your potential clients.
Of course, this doesn’t mean that the leads within your bankruptcy mailing list can’t convert for email marketing. In fact, this can be an excellent way to ensure your bankruptcy leads will eventually take advantage of your services. All you have to do is create an informational e-book explaining how bankruptcy can free a person of their financial problems. Such an e-book can explain: the legal consequences of avoiding debt, how Chapter 13 bankruptcy can avoid foreclosure and how bankruptcy doesn’t mean the end of a person’s credit history. From there you create a website. This website should promote your services as well as the free e-book you’re offering. Don’t forget to advertise this website when sending out flyers to those on your bankruptcy mailing list. They will want to visit the website because they would be getting a free e-book. But before you allow them to access the e-book, make them provide at least an email address and their first name. It is through this email address you will send them e-courses further explaining the benefits of filing for bankruptcy.
So, what can you expect to pay if you build a bankruptcy mailing list through bankruptcy leads? It will depend on how many leads you buy as well as the company you buy them from. Usually, you can get thousands of bankruptcy leads for a few hundred dollars. Of course, you will still need to pay for your direct mail campaign as well. If you use a professional service to conduct your campaign, expect to pay several thousand dollars. But if you do it yourself, you really will only have to worry about the cost of stamps, printing cartridges, envelopes and paper. If you’re a beginner at direct mail marketing, don’t be afraid to advertise in a simpler way to the individuals on your bankruptcy mailing list. It may be a bit more crude, but you don’t need fancy postcards or circulars to get people to respond.
Disclaimer:This blog or article is for information purpose only, and should not be treated a professional advise or price protection guarantee. This blog is mainly used for search engine optimization and other commercial purposes and it is advised that readers seek professional consultation in the field of interest for more information.
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