The economic woes that have already impacted so many businesses are a boon for those of us who practice in the area of asset protection. About one year ago the flood gates opened and mortgage bankers, mortgage brokers and real estate developers poured in.
There is still a steady flow of real estate developers and investors who have signed personal guarantees on bank loans. Now that their properties are upside-down and they are looking to default on the loans, the personal guarantees are becoming a major problem.
Recently we have seen a new influx of car dealers and restaurant owners. Many car dealers sign personal guarantees for their leases and sometimes inventory loans, as do some restaurateurs. Is there any hope for any of these enterprising Americans to keep their personal assets out of reach of lenders and landlords?
Fortunately for them, there is. We have represented well over 100 clients this year alone all of whom were facing personal guarantee calls. A lot of the time we cannot place our clients? assets beyond the reach of their creditors. (That is possibly only with liquid assets and retirement plans.) Usually, the objective is to make assets difficult and expensive to get to.
If we can change the plaintiff's economic analysis when it comes to collecting against our clients? assets, we can place our clients into a better negotiating position v.v. the creditor. Some creditors will chose not to pursue assets in an asset protection structure and the rest will be a lot more willing to negotiate with our clients.
Marie H. is a great example of what is possible. Marie, who is 74 years old, personally guaranteed $4 million of loans taken out by her son, an aspiring developer. The son has now defaulted on all of his loans and the bank is coming after Marie?s assets on the guarantees. There is a strong likelihood that Marie will get completely wiped out and will have to rely on Social Security for the remainder of her life. We transferred her liquid assets to an offshore structure and her real estate into a domestic asset protection structure. After some initial blustering, the lender (a large bank based on the East Coast) agreed to settle with Marie for approximately $200,000.
George T. owns four new-car dealerships in Southern California. Three of them are in serious trouble and George is considering walking away. He owes his lender millions of dollars with a limited personal guarantee, and has also signed personal guarantees for the lot leases. We have persuaded George to sell his remaining profitable dealership and his real estate holdings and to transfer all of his liquid assets into an offshore asset protection structure. Neither the lenders nor the landlords have even attempted to recover George?s assets transferred offshore.
The economic downturn of 2008 will impact millions of Americans. Many of them will lose all of their assets and will have to start from scratch. Those with the prudence to plan and seek counsel may be able to keep the bulk of their assets.