Florida LLC business failed, still owe SBA $90K on EIDL loan, not sure what to do

[jimhearte]

Like many others, COVID19 completely decimated my business, I attemped to save it by filing for small PPP and a $90,000 SBA EIDL loan, but the writing is on the wall. Company has been in steady decline for the past 2 years and will have zero funds by mid 2023.

I used the EIDL loan to purchase inventory to sell, advertising/marketing, and small amount for personal payroll.

I have no credit card debt nor owe any other suppliers money at this point in team, all the debt is owed to the SBA.

I have kept up and paid all business taxes and am good standing with the IRS.

From my understanding, because this loan is under $200,000 this loan not require a personal guarantee but it did have a guarntee of "business assets" 

At this point, I am planning to abadon the business and return to a regular 9-5 job.

I am not sure what to do here, I have no real business assets of any kind aside from 1 old truck that is not worth more than $5K.

I have no personal assets of any value either, 1 old truck worth ~$5K

I would like to be able to just get rid of this loan and put it all behind me, I assume I will be looking at filing Chapter 7 for the Florida LLC? Do I also have to file personal Chapter 7?

SBA Filing  https://i.imgur.com/kl7tr5P.png 

Do you have any advice for me? Is bankruptcy even necessary? Since there is no personal guarantee and no business assets? 

[FireMedic1]

Welcome @jimhearte 

You can get a free consult with a BK Lawyer who specializes in LLC's in Fl. Here's a snippet about the Fed's BK Laws:

"As soon as a bankruptcy petition is filed, the business will stop operating and an Automatic Stay will take effect. An automatic stay prevents creditors from coming after the company's assets.

When an LLC files for bankruptcy, the bankruptcy trustee will liquidate all the company's assets and distribute them to creditors. This will be done according to the priority stipulated in the U.S. Bankruptcy Code."

https://www.findlaw.com/bankruptcy/chapter-7/chapter-7-bankruptcy-for-llcs--everything-you-need-to-k... 

[843dk5u39mcf]

First off, I am not a lawyer.

There is little to gain from filing for business CH7 bankruptcy.  Without a personal guarantee on the EIDL loan, I don't see a reason to file for personal bankruptcy either. If you have no other personally guaranteed business debts and can service your remaining debts reasonably well with your new job income, skip the BK, close/wind down the company entity through the secretary of state, and move on. The SBA may assign the EIDL loan to a collection agency, but they cannot sue you personally. Just my two cents.

[hoosier64]

Most attorneys should be willing to do a free consult. They won't solve your problems for free, but they can help you make an informed decision about whether or not its makes sense for the business to file for bankruptcy, understand whether or not you will be personally liable, and provide details on the cost of their services.

[despritfreya]

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@843dk5u39mcf wrote: There is little to gain from filing for business CH7 bankruptcy.  Without a personal guarantee on the EIDL loan, I don't see a reason to file for personal bankruptcy either. If you have no other personally guaranteed business debts and can service your remaining debts reasonably well with your new job income, skip the BK.

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This is pretty much the correct answer.  An entity (LLC, corp) does not get a discharge in a Chapter 7.  A Trustee simply takes control of the assets for the purpose of liquidating.  However, if those assessed were used as collateral and the amount owed to the secured creditor exceeds what the assets are worth, there is noting to liquidate and the Trustee would simply abandon those assets and close the case.  What a waste of time and money.  If you have no personal exposure to entity debt and are otherwise ok in your finances, there would be no need for you to file a bankruptcy either.

Des.

[Anonymous]

Good info @FireMedic1