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JerrySJD
JerrySJD, Attorney
Category: Business Law
Satisfied Customers: 821
Experience:  Attorney for business formation, business sales, tax, partnerships, sole proprietors and buy/sell agreements.
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We had a corporation that was taken over by another company.

Customer Question

We had a corporation that was taken over by another company. They left our corporation owing a large debt to a bank. The bank has now come up with notarized personal guarantees for the loans our corporation had with them. We were never in the state at the time of the notaries and we have not seen the documents before. What do we do?
Submitted: 2 years ago.
Category: Business Law
Expert:  JerrySJD replied 2 years ago.

JerrySJD :

Did you sign the guarantees?

JerrySJD :

Sounds like no, you did not sign the guarantees, but that they were forged.

JerrySJD :

You have to write back to the bank and say that the guarantees are forged and that you did not sign them, that you were not even in the state on the date they were signed. Whoever did sign them is in big trouble, as that is bank fraud.

Customer :

We have seen the documents. They look like our signatures, but we did not sign them. I have debit card statements showing I was in Texas at the time of the notaries. I also had back surgery and was unable to travel. We have told the bank lawyer over and over they are not our signatures and we were not there and they have stalled and stalled. They have cost a deal that would have saved us personally, now we have to file bankruptcy.

Customer :

One of the signatures was taken from a document my husband had signed for me and it was notarized. He would never sign a guaranty for me. The signature must have been lifted and put on the document.

JerrySJD :

You have to write to the bank and tell them, in writing, that the personal guarantees are forgeries. Tell them you can prove they are forgeries because you were not in the state at the time the guarantees were allegedly signed. Tell them that you need to see the orginals, since you believe that the signatures were photocopied and then notarized. Look at the name of the notaries. Check with the state to find out where they are. You can also tell the bank that their reliance on forged documents, even though they have notice of forgeries, violates banking and fair credit reporting laws. Very important to tell them you need to see the originals.

JerrySJD :

Are you filing for bankruptcy for other reasons, other debt?

Customer :

I have told them I need to see the originals. My husband just had aorta surgery and has been in the hospital for two months. He was recently released but I can't leave him. They will not allow the documents to leave their office. They will not photo copy the notary book and send me a copy. They say I can see the originals in their office

Customer :

Because we lost the deal because the bank would not move on this deal we lost the chance to get income. We went from a three figure income to a low two figure income and we had to sell our house at a loss of over $200,000.00. We could not pay for credit cards and they are after us. We cannot pay our debt, so yes the bankruptcy is about debt.

JerrySJD :

But are you filing anyway, even without the guarantee issue?

Customer :

It seems it is very hard to find a business lawyer that would help us based on contingency or a reasonable amount of money.

Customer :

yes we will be filing

JerrySJD :

If you are filing anyway, then all the debt will be discharged. You have a case against the bank, but the lawyers are reluctant to take the case because they do not want to take the risk. The bank will say that they did not give the loan for reasons other than the guarantee.

Customer :

My husband family has an LLC and the bank wants access to our share when it sells. Would a bankruptcy protect that?

JerrySJD :

Do you own part of the LLC?

Customer :

yes

JerrySJD :

Is it a minority interest?

Customer :

no

Customer :

wait not sure what you mean, we are caucasion

Customer :

my husband owns it with his two brothers

JerrySJD :

no, I mean does he own more than 50%

Customer :

they owned the land our business sat on

Customer :

we have a third

Customer :

sorry so dumb

JerrySJD :

You are not dumb. The bank does not have originals of the guarantee. They must be photocopies or faxes. The one third of the LLC will go into the bankruptcy, so all the creditors have a crack at it. The bankruptcy trustee will try to get a buy out of the one third, If they cannot get that, because the brothers say no, then there is not a lot they can do with it. The bankruptcy trustee can try to force a sale of the one third.

JerrySJD :

When you get into the bankrupcty, you can tell the trustee that the guarantees are forgeries. That will lower the amount at stake to the credit card bills and other debt.

JerrySJD :

The bankruptcy trustee can demand the orginals.

Customer :

So if my husbands brothers refuse to allow it, the bankruptcy trustee can't get to our share?

Customer :

I see the bankruptcy trustee can help us withe the forgeries?

JerrySJD :

With a lower amount of debt in the bankruptcy estate, you might be able to settle on a lower buy out for the minority interest. If the brothers refuse, the trustee will still take the on third interest. Yes, the trustee can help you with the forgeries. That is probably your best bet at this point.

Customer :

I see, would our school loans take first place over credit cards

JerrySJD :

School loans are not dischargable in bankruptcy.

Customer :

what I thought

Customer :

I see you have helped a lot thank you

JerrySJD :

No problem. If you can get out of the guarantee (you can, they are forgeries and there are no originals), then there is less to fight over.

JerrySJD :

Thank you for using JustAnser! Please click "Accept". If you need more, just let me know.

Customer :

your right, we should sell our shares of the LLC before filing bankruptcy and pay off the loans

Customer :

thanks again

JerrySJD :

There is a 90 day look back on payments to other creditors, so if you pay off the other loans, then you have to wait. If all that is left is the guarantee, then you can let the bank sue you and demand the originals in the suit. They cannot produce them because they are forgeries, as you have stated. If they were signed, then there is a problem. If they were not, you can prove it. There is a one year look back on sales to insiders, so if he sells to his brothers, you have to wait a year for the bankruptcy. Write to the bank as I originally suggested. Tell them to examine the gurantees as they are forgeries. Tell them that you know they do not have originals because you were not there. Tell them to check for original signatures. They can do that.

JerrySJD :

Good luck.

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