Need some advice on potential judgement/BK that may be coming
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I'd like to hear some thoughts on what the effect of a possible judgement and/or BK would mean for me as a licensed rep. I work at a bank as a wealth mgmt advisor. I'd like to keep my description of the circumstances as generic as possible for now.
I am in a real estate deal where I am a 20% owner of the S-Corp. The deal we are in is an acquisition and development deal for a subdivision in a very nice location. The project has been unsuccessful due to the demand for residentail lots be slim to none. We owe about $8MM and the bank has called our note after four years of renewals. The bank has filed suit to sue us on the note as we are each personal guarantors. If the bank is successful in receiving a summary judgement, we will each have a judgement against us for the entire note, then they will foreclose once that is in place and after the fact. This is the route more and more smaller banks are going now so they have you on the hook personally and can garnsih wages, assets, etc.
If they are successful, I will have a judgement against me that I could never pay regardless of how successful my career is. I am 43. I'd almost have to file BK as that's the only thing that would wipe this judgement out and allow my family to have any chance to prosper at some point down the road. We've taken a horrendour beating on this project already and while I'd like to do what is right, I'd never be able to pay back millions of dollars without the property ina much better market.
So my questions are:
1) I've been a very successful employee at my bank (a Top 20 bank); how would a BK be viewed? I've read mixed things. I understand a BK is not grounds for losing your 7 but that bonding might be an issue.
2) Will it be viewed differently since even if I had the money and wanted to continue paying a $35k/month payment, half my partners are folding up and I only own 20%? Is this viewed differently than me running up a bunch of bills for personal stuff and mismanaging my finances before walking away.
3) Do the larger banks self-insure or bond their own employees or is it a 3rd party surety? I think if we did this on our own I'd have an even better shot.
4) Any other suggestions? We have not been treated real fairly at the bank that loaned us the money for this project (not my bank obviously) so we will fight this as long as we can but I want to have an idea of worst case and what to do/will happen.
I can think of two possibilities...
See if you can get a check to transfer your book to UBS, MSSB, ML etc and hope it is enough to pay your debts off
pitch a private equity venture to your clients were you will buyout your partners at a reasonable shortsale type pricepoint
Yeah we are working on a total of six leads right now for someone to buy the note at a discount. My bigger question centers around my ability to keep my job and be bonded if I have to file.
It depends on the firm's policy. As a former CCO of 10yrs for 2 firms, I would not have termed a rep for a bankruptcy but depending on the rep I might have considered special supervision over the rep's handling of client funds. Some higher profile firms won't accept a bankruptcy disclosure though most will. It sounds like you'll have a disclosure reporting requirement regardless because if you don't go the BK route you may have to disclose a "compromise with creditors."
How about asking the bank's recruiter if they would accept a new recruit with a BK or compromise disclosure? Be careful while trying to remain discreet. You don't want to tip off the compliance department that you're fishing for a future determination on your record. A good registrations clerk will be able to detect when a rep is considering leaving or involved in something serious and therefore report it accordingly to higher.