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MDLaw
MDLaw, Attorney
Category: Business Law
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Experience:  Experience in business law, contract law and related matters.
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I wasnt too sure which category to put his question under,

Customer Question

I wasn't too sure which category to put his question under, but here goes. I own and operate an s corp family business (dry cleaners) in a shopping center. I have family members as employees and we have been operating since 1998 in Pennsylvania. After the economic collapse, my business revenue shrank 30-40%, I've cut my own pay by 66%, needless to say life and business has been difficult. I have personal debt from times when i could not pay myself and my creditors (credit card companies) cut my credit in half when the economy tanked. My credit went from amazing to bad in one fell swoop. I have aging equipment that i cannot replace because i cannot get a loan as a result of my credit. New equipment would boost my business revenue for a number of reasons. My business became delinquent with rent payments and now I am about 6 months behind. My original landlord was generous and we had a verbal agreement that I would sustain current payments as long as they were paid consistently and hopefully when the economy turned around. They have since, to my understanding, either sold their leasing realty company to a new leasing company or turned over my case to a new leasing company. The new leasing company has told me they want a "substantial" amount of the delinquent rent payments or they would turn it over to a collection agency. They told me they would like to take the friendly route, but I have no savings or equity of any kind. What are my options? Also, a side note: the "anchor" store, a grocery chain, in my shopping center, which probably has the most foot traffic, they may be going out of business in about 2 years. They have said they will stay for the remainder of their lease which spans that time. The loss of an anchor store in my shopping center would greatly devalue my business. Who's responsibility is that, the absence or sustainability of an anchor store to benefit the surrounding merchants? Thank you.
Submitted: 1 year ago.
Category: Business Law
Expert:  MDLaw replied 1 year ago.
Hello and thank you for using the JA website. I look forward to assisting you this afternoon.

First, let me say how sorry I am to hear about your situation. Being a small business owner myself, I definitely understand your situation.

You appear to have 2 questions, correct? Your second question appears to be about the anchor store. In order to answer that, I need to know if you have a written lease and whether the lease addresses anything about anchor stores in the shopping center.

Customer: replied 1 year ago.
I do have a written lease, but did not think to read that for the anchor store question. I have it now and am reviewing it for that information.
Expert:  MDLaw replied 1 year ago.
Okay. Do you want me to wait for you to get that info and answer both questions at once?
Customer: replied 1 year ago.
If you could answer the primary question first, I would appreciate that and understand I may have to alter my payment to you for the 2 questions. I will take into account your expertise and service to me.
Expert:  MDLaw replied 1 year ago.
No problem. I need to go offline for a little bit in an hour or so and that's why I asked.

Your initial question appears to be about your options with respect to your delinquent/late payments, correct? Unfortunately, all you can do is try to negotiate with them to take whatever it is that you can give them of the late payments at this time. They have the legal right to turn it over to collections and there is nothing that you can do legally to stop them if you are indeed late. Based on the facts that you have stated, it appears that you do not yet know how much they want in order to stop collection activities from beginning. If I were in your shoes, I would start out finding out how much they want and then try to negotiate a lesser amount and perhaps come up with a schedule of when the outstanding payment will be paid in full to them. Like I said, I've been in your shoes and it's never made sense to me when creditors refuse to work with you. You can't give them money you don't have and threatening to go the collections route or credit bureau reporting route isn't going to make money magically appear! If I were in their shoes, I would think that some money is better than none but it doesn't always work that way. Hopefully, in your case, they will see it that way and be willing to work with you.

Let me know if that has answered your initial question or whether you need any clarification. When you have the additional information about your second question, just post in reply to this. Thanks!



Customer: replied 1 year ago.
After reviewing the lease agreement, there seems to be no mention of anchor store.
Expert:  MDLaw replied 1 year ago.
Unfortunately then, without there being any mention of their responsibility to maintain an anchor store, then there is nothing that you can do legally. Often, because anchor stores are given certain rent discounts because of the fact that they attract business to the shopping center, smaller stores will often include provisions in their leases that state that their rent should go down if the anchor store leaves or shuts down. You have stated, however, that your lease contains no such language and since the lease is the contract that outlines the responsibilities and obligations of each party, then the answer to your second question is that the landlord does not have the responsibility to maintain an anchor tenant in the shopping center.

Please let me know what additional questions you may have. I'm sorry that I did not have better news for you.

Customer: replied 1 year ago.
I really appreciate your candor and plain speak concerning this. Would you consider bankruptcy if this was you? I guess as a last resort. And what about timing of such action? Would that be if I defaulted or after i could not come to terms with the new leasing company? Thank you again.
Expert:  MDLaw replied 1 year ago.
Bankruptcy is an entirely different area of the law and is not one of my expertises and so you would want to ask that as a separate question in the BK area of the site. Also, keep in mind that we cannot give legal advice and also keep in mind that I have no idea what your actual financial situation is. When considering something as serious as BK, you would want to sit down with a BK lawyer and/or a financial advisor and look at the entirety of your financial picture as a business. You can certainly use that as leverage in your negotiations (the fact that you may have to file BK and letting the landlord know that) but that would be a strategy decision for you to make and again, due to website and professional ethical restrictions, I cannot advise you on any actual strategy since we do not have an attorney-client relationship.

MDLaw, Attorney
Category: Business Law
Satisfied Customers: 5850
Experience: Experience in business law, contract law and related matters.
MDLaw and 4 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.
What if the lease agreement expired and a new one be needs to be drawn up? Would the absence of an anchor store be considered in negotiating new lease terms and rental amounts? Seems like an obvious answer, but I would like another "colleague's" opinion on business matters. After your answer I will hit accept on the webpage to accept your response. Thanks again!
Expert:  MDLaw replied 1 year ago.
Yes, if you no longer have an existing lease, that would certainly be something to be used in negotiations. It is quite customary, actually.

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