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Old 01-25-2020, 10:39 AM
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Default I need some business advice. (Your thoughts please.)

Many of you have some solid thinking, and I'd like to get your opinion on this.

A little background:

The wife and I sold our restaurant back in 2015.
We held out as long as we could after the Obama recession, but when things get tight, the first thing that comes off people's spending habits is dining out, and it pretty much killed us.

Anyways, I had a hard time selling the place and took a real hit when I did.
I finally found someone, not the best candidate, but he was able to make the down, and I elected to carry the note with a balloon payment due in a couple of months from now.

This guy got into this business without a clue, just knowing he wanted to.
He could have just stepped in, asked for and taken some advice and it could have been turnkey, but he didn't.

He took a year, and spent a bunch of money turning the place from a nice family friendly BBQ restaurant into a bar.

We we're located halfway between Phx and Vegas.
Many people made it a point to stop along the way for some good food.

Unfortunately, he decided not to get a full food service license, and went with the lower grade bar food license which only allowed him to serve prepackaged deep fried, microwaved sort of food.

Also unfortunately, drinking and driving as a sport died out long ago, and no one in their right mind is going to stop halfway to Vegas for a few hours and drink.
Also, there's not near enough people in this town to even support a bar.

Bad decisions all around.

He finally got the place open, and hired a few friends to run the joint while he tended to his landscape business 150 miles away.
He'd come up on the weekends and spend his whole time sitting at the bar drinking and buying rounds for all his new "friends".

To add to his bad decisions, he never paid for any of those drinks, assuming since he was the owner, that everything was free.

Come the end of his first month, he hadn't paid his help a dime, was out of inventory, out of money, his help quit, and he closed.

He's had the place up for sale since, but he's asking waaaayyyy too much for it, and no one's going to pay it.

The thing is, he's been making his payments to me all along this whole time, with only one or two missed or late.
There's zero communication between us.

Now, here's the thing.
His balloon of tens of thousands is coming up in a few months.

There's only three scenarios that I can see.
A. He either has the money, or sells the place dirt cheap to pay me off.
B. He defaults, and I have to foreclose.
C. I can extend the note, and allow him to continue making payments.

I do have a guy who has an RV park almost next door to the property who will be more than happy to pay off the note and buy the place and expand his park if I have to foreclose, so there's that.

The big question is, is it appropriate to contact the dumbass who I sold it to and ask what his plans are so I can prepare, or do I just wait and see if the shit hits the fan?
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Old 01-25-2020, 02:42 PM
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Default Re: I need some business advice. (Your thoughts please.)

If in your shoes I'd want to contact so I could plan. But being he has not communicated with you at all, has acted like a dumb ass and made some bone head moves I would resist the urge to contact and be ready to foreclose if you have to. Hope for the best but plan for the worst. Good luck.
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Old 01-25-2020, 03:14 PM
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Default Re: I need some business advice. (Your thoughts please.)

I am not a lawyer but I have had some personal experience with exactly your situation. I won't cite my specific events except to say that over 40 years of business operations I have been on both sides of your situation.

Since he has been paying the monthly agreed to stipend, you have no legal ground to foreclose. Suspecting his insolvency is not enough. Your lawyer has likely told you that. However if I have learned one thing in my personal experiences, the worst out comes occur when people do not talk to one another as the impending crisis approaches.

Keep in mind that, in most states, he can keep you at bay, without offering one dime, for at least six months.

You know he is about to hit the wall. He knows it as well. And both of you know the restaurant has no value. You both also know that at foreclosure there will be a very long drawn out and expensive process for you to regain your property as well as for him. To be released of the obligatory debt he will suffer, he needs the issue settled as well.

It seems the only value available for negotiation is the offer from the Camp Park. If I were in your position, based on what you presented here, I would begin negotiations with your debtor using that value as the fulcrum for your position as well as his escape from the corner he has painted. But I would advise you to do so with a good attorney conducting the communications through his office. Yes that will cost you but a whole lot more is at stake here. Besides, if you are left holding the bag, your attorney will charge you for a lot more.

Remember that he can declare bankruptcy and possibly leave you holding all liabilities. From creditors to the IRS. That should keep you up at night.

Get lien releases on the property. Your lawyer will agree.

There is no good out come from these situations. Your primary goal here is a legal extrication from you dilemma, money is secondary. Then get on with your life.
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Old 01-25-2020, 07:28 PM
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Default Re: I need some business advice. (Your thoughts please.)

Thanks for your responses.
And thanks for the PM Franc.

I'm seriously hoping he is about as financially strapped as I am, and we don't end up throwing what monies we don't have at lawers.
I presently don't have one, except maybe the guy I hired to form the LLC.

Whether it's worth a damn or not, there is a line in the closing contract that obligates him to $50 a day penalty beyond his balloon date, but I also realize that bankruptcy could 86 that.

If he files BR, it would be a major ding against him, both creditwise, as well as the lawyer costs.

As I'm seeing it, the property isn't earning a dime, and really hasn't since day one, but yet, it's costing around $700 a month in payments, plus property taxes and maintaining insurance on the place.

If he realizes that if he just walks away, and I let him, if nothing else, he is free from the above obligations, and is actually better off on his monthly bottom line expenditures, and is only out his investment.

I'm willing to bet at this point that he'd be happy to never have to think about his obligations ever again. The money he spent is gone, and even if he files BR he'll never get it back, so unless he can sell it real quick and make a little profit above the note, he'd be way better to just sign the place back over to me and be done with it, without involving lawyers, courts and fees.

I really can't see any advantage to him to file BR, or to have a foreclosure in his financial profile.


Of course, I don't want the place back.
I'm done playing restaurant, and he's let the building go to shit, as well as probably everything in it.
The RV park guy knows this, and is willing to buy the place "As is".
That IS my ace in the hole for sure.

I can't imagine how I could be held responsible for any other debts he owes to anyone if I take the property back.
I think from what I gathered, he paid cash for everything he did to the building, or borrowed it from family or friends.

I have one large gun I could pull out. My Dad.
He's the best negotiator in the world, and we're on good terms, but I really don't want to drop this in his lap if I can do it without him.

None of us is up against the wall yet, and it's not enough to make me lose sleep, but today is the day in my mind that it has come to the front burner, and all in all, my gut says to call this guy.
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Old 01-26-2020, 12:08 AM
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Default Re: I need some business advice. (Your thoughts please.)

Nothing happens unless one of you makes the move. Get in front of it.

Yes, contact him. but I repeat, get legal advice before you negotiate.

I understand Mike Avanatti, a famous Las Vegas lawyer, is looking for new clients.
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Old 01-26-2020, 01:34 AM
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Default Re: I need some business advice. (Your thoughts please.)

Quote:
Originally Posted by FrancSevin View Post
Nothing happens unless one of you makes the move. Get in front of it.

Yes, contact him. but I repeat, get legal advice before you negotiate.

I understand Mike Avanatti, a famous Las Vegas lawyer, is looking for new clients.
Thanks.

Wait, did I just get a jab in the ribs?
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Old 01-26-2020, 02:48 AM
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Default Re: I need some business advice. (Your thoughts please.)

Quote:
Originally Posted by Bannedjoe View Post
Thanks.

Wait, did I just get a jab in the ribs?
Joe, he’s going to be expensive. First thing you have to do is go his bail for him.

I don’t see an easy resolution for your problem but I hope you can Get it resolved with the least damage.

Jim
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Old 01-26-2020, 09:04 AM
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Default Re: I need some business advice. (Your thoughts please.)

No lawyer here, but it seems to me that as long as your purchaser is making payments per agreement there's nothing you can do at this point. You'll know in 6 months his intentions. I'd leave it be.

Meanwhile, your new buyer probably won't go away.
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