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I sold store, new owner defaulted on payments. I can put on notice, file suit but in meantime inventory gone!

I sold a furniture store, and the new owner is defaulting on promissory notes. I'm going to put him on notice, then file suit, but in the meantime, all of the assets are disappearing, so I'll get back a virtually worthless shell. What other actions can I take?

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Answers (2)
William A. Price
www.growthlaw.com
Business Lawyer
DuPage County, IL

You need competent local litigation counsel to freeze assets, and to recover on any personal guarantees. You and the financing bank could put UCC liens on all items, and could cooperate to take back possession ASAP. The buyer may agree to reduce costs of litigation.

On inventory, is there any furniture manufacturer that would let you sell on consignment, until you can get sales back on track and return to advance ordering? Any way to recapitalize with lower cost loans and to bring in more salable stock? Any way to work with local builders and developers or hotels to pre-sell larger orders for when you're back? Any employees who could run the store well, while you work on sales/new money?

Every challenge is an opportunity, though rarely fun. Hope your defaulter turns out to be a non-fatal problem for the business.

Hope this helps,

Bill Price
wprice@growthlaw.com

Mar 26, 2013
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The BAF Group LLC
MD

Stop asking here and get yourself an attorney, pronto! What kind of a sale agreement did you have? What are your rights under that agreement? Did the Buyer sign personal guarantees for the note? Again, an attorney is critical, and fast.

Aug 15, 2011

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