I started a business in 2007 and signed a five year lease on a new building with a two year personal guarante... With the recession and an increase in rent due to CAM (33% increase), the business is faltering. I had to return to full-time employment just to help pay some of the rent and the fact that my husband was laid off. He is now working again but at less pay. Between working full-time, employee issues, and the fact that it is not making money, we are wanting this financial, emotional, time consuming drain to end. We have tried selling but it is not. This time of year through April is always profitable, but come spring and summer we lose all the profit and end up putting anywhere from 5-10,000 of our own money to keep it afloat. So come April we will have put in approximately 34 months at this location. I wrote a letter to the landlord stating that if rent/ cam was not reduced we would not keep going....he just stated that everyone has it tough and that I just need to hang in there. I am in debt of back payments of CAM/Rent to him of approximate 28,000 right now. At the time of my 2 year guarantee agreement, I was behind in CAM of 21,000. I basically am paying him any profit after expense. Three times there was no profit so I paid the 2500 (half the required rent payment) from our personal funds. So far he has not demanded the back payments. But we are getting further in debt owning him as we continue to be in business each month. So I have a few questions:
1) Since my two year personal guarantee was up, and I still owed him in the personal guarantee portion 21,000 in back Cam/Rent. Should I continue to run the business until April as it will allow me to make some more rent payments to him without taking money from me personally due to the profitable season, and possible lessen this amount owed to him. Or should I close the doors as the longer I am in business the more the back rent increases, as I never make enough to completely pay full rent. Does the court look at the total amount paid to him as being my portion of the personal guarantee. My husband thinks that if we stay in business through April and then continue to pay him as much rent as possible, that this will decrease the amount we personally owe him as the court will look at total payments. My fear is that by staying in business we are just adding to the debt we will be personally be responsible for.
2) If he then tries to sue us for the remaining lease, we are incorporated and therefore, we would file bankruptcy on the business. Do we also have to file personally in order to file business bankruptcy?
Any suggestions, advice is welcome!
