All, I am seeking your advise(s) on this situation. I am a guarantor for a small business which is going through a Chapter 7. But my question is the building lease won't be expire until 3/2008. Do I have to pay for the rest of the remaining to the landlord or just to the time when they file for bankruptcy? How can I resolve this? Please advise.
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Aside from being the personal guarantor on the lease, do you have any other tie to the business?
Will the business be vacating the leased premises?
Business type debts don't receive the same protection as consumer debts, (also note, leases are not extensions of credit, so their discharge in BK is a bit tricky)...
So, yes, conceivably, if the landlord wanted to be aggressive about collecting the balance due on the lease, the landlord could come after you. You're the personal guarantor, and you are not filing BK...so you're fair game. -
HHM,Originally posted by HHM View Post
Thank you. No, I have no other tie in at all.
It's a restaurant so I don't know.
Yes, she is being agressive and greedy. I ofter to pay 3 months but she won't accepted.
In my case, what else can I do?? I don't want to pay the landlord much more than 3 months of rent.Comment
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Whether you should pay or not is not an easy question to answer here...if you did pay, is there any chance the restaurant owner would pay you back out of the kindness of their heart?
Looks like the lease has about 18 months left...(not including any back rent that may be due). One nice thing about business leases, in most states, the landlords need to take steps to mitigate their damages; if a tenant defaults, the landlord should re-let the property ASAP, thus mitigating the damage caused by the loss of rent from the defaulting tenant. So I don't think, ultimately, you would be on the hook for the entire 18 months (unless its a very tough commercial rental market).
I suppose morally...you should pay...after all, from the landlords perspective, you are the personal guarantor and you promised to pay the rent if the tenant did not, and you assumed that risk when you signed off.
If the restaurant is going to cease operation, then I would use whatever leverage you may have with the restaurant owner to vacate the premises ASAP so the landlord can re-let the space, that way, you minimize your risk for how much you will be liable for.
Also, I wouldn't pay anything until you have a signed agreement from the landlord releasing you from further liability. So, whatever you end up paying, its done.Comment
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