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Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 53982
Experience:  32 years of experience practicing law and a businessman.
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We are looking into closing and disolving a small business

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We are looking into closing and disolving a small business (family and wedding photography) LLC in Texas. Business very slow and can't pay the bills. Don't really want to declare bankruptcy. We do have open commitments for jobs into spring of next year that we either need to fulfill or refund deposits. We moved out of a leased space because we couldn't afford it but are still getting billed for it. Have tried to get out of it but landlord unwilling....is trying to re-lease it. We have a handful of marketing//advertising contracts that we get billed for monthly that we have also tried to break, unsuccesfully. If we could break or get out of these few contracts/lease, closing or significantly downsizing the rest would be manageable. Without breaking these, we are sunk. Is there another route to closing down than bankruptcy?
Submitted: 7 years ago.
Category: Business Law
Expert:  Richard replied 7 years ago.

Good afternoon. Being on the verge of bankruptcy is sometimes as good as being bankrupt without the bankruptcy filing because when creditors really have no recourse because the business is on the ropes and has no assets to go after. You can basically tell them to simply sue you because you are a limited liability entity and the entity has no assets. This should also give you some additional leverage with vendors...either negotiate a new deal and help us survive and get something or we file bankruptcy and you get nothing. You should also remember that bankruptcy does not necessarily mean liquidating...you can also choose a different chapter of bankruptcy protection whereby you are simply restructuring your debts and liabilities in a manner that will allow you to continue in business.

 

Remember also that with respect to your lease, the law requires the landlord to mitigate damages. Mitigation means that the lessor is required to make an effort, once you give notice, to find a new tenant. The lessor will only be entitled to recover the loss of rent during the search time for a new tenant; but, once the new tenant makes the first rent payment, you are released from any further obligation under your lease.

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Richard and 3 other Business Law Specialists are ready to help you
Customer: replied 7 years ago.

Thanks. When my wife signed the lease we were not an LLC yet, so the lease has "her name, an individual" on it. Even though the company has since been formed into a LLC, would this lease follow the company necessarily?, or be treated as personal?

Expert:  Richard replied 7 years ago.

If she signed the lease individually, you would have personal liability for the lease...but the mitigation requirement upon the landlord is going to limit the extent of this liability.

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.