Case Study: Kamal’s Civil Engineering Company – Negotiating Personal Guarantees
The Situation:
Kamal’s civil engineering company was liquidated, leaving him with personal guarantees on a significant contract with a finance company. The finance company was pursuing legal action against Kamal and his father.
The Challenges:
- $77,000 debt from personal guarantees
- Ongoing legal demands and the threat of legal action from the finance company
- New company started to run the business
- Limited time before the next court date
LemonAide’s Approach:
- Explored alternatives to bankruptcy
- Initiated negotiations with the finance company
- Highlighted the potential outcomes of bankruptcy to the creditor
- Negotiated a payment arrangement and asset retention
The Outcome:
- Settled on a payment of $50,000 over 5 months, saving $27,000
- Kamal retained some items of the financed equipment
- Avoided bankruptcy and preserved the new company
- Gained time to pay the debt without losing business assets
Key Takeaways:
- Personal guarantees can lead to significant personal liability
- Negotiation can be a powerful tool in debt resolution
- Quick action and professional representation can lead to favorable outcomes
Facing personal liability from business debts?
