Case Studies
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Franchise Restaurant Case Study
This once successful pizza franchise restaurant, experienced significant declines in revenue in 2010. As revenues continued to drop, the business was not able to meet its basic operational overhead and the guarantor realized a successful exit strategy that involved a settlement of his personal guaranty was the only viable plan. With cooperation with the SBA lender, who was owed in excess of $510,000, we were able to sell the business to another franchisee, protect the client's remaining assets, and then settle the personal guaranty for 5 cents on the dollar owed.
Total Outstanding Debt: $510,000
Payoff of Personal Guaranty: $25,000
Total Debt Forgiveness: $485,000
Attachments:
Pizza Franchise RestaurantUtah
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This Debt Relief Services client was an excellent example of why we refuse to turn anyone away. We agreed to represent this woman despite her lack of ability to pay because it is our mission and our obligation.
The client is a housewife whose husband is overseas in the United States Air Force* deployed within high threat areas. This client noticed a lack of proper, healthy food options in her area and obtained SBA financing to open a small locally grown, organic produce and meat market. Though the demand was enthusiastic in her area, unforeseen costs such as a fire, repeated theft at gunpoint and other damage cut into the working capital and the eventual economic downturn forced her to default on her debts. Despite the obvious danger and lack of funding, the client worked without staff seven days a week from 6am to 8pm to try and recoup the lost capital and regain her solvency.
Her body failed to support the ambitious plan and broke down. Repeated collapse forced her to close her doors as the final time, her customer emptied the cash register rather than calling an ambulance. She contacted her bank immediately and attempted to work out a solution to her default status despite having no business to fund such a plan. She was rebuffed and ignored for more than a year. Her first communication back despite her constant attempts, was a letter from the SBA telling her that her loan was about to be moved into collection by the United States treasury due to, “Your lack of communication in regards to loan number XXXXXXX.”
* The policy of Second Wind Consultants is to offer our complete corporate services to active duty military personnel, pro-bono.
Thinking bankruptcy was the best option, this client contacted several lawyers, but after due diligence was completed, she was aghast to discover her filing of a bankruptcy would also require her husband to file due to the way her loans were secured, and the result of the bankruptcy would strip her husband of his clearance and cause him to be expelled from the position he had in the military.
At this time, the stress of the situation caused a break in her already weakened physical state and she began to lose weight and sleep. Her doctors were unable to solve the issue for months and she was hospitalized and fed intravenously and given medication to force sleep until less extreme methods began to take effect. She was diagnosed with an immune disorder similar to lupus. In addition, she was also diagnosed with adrenal failure and a joint disorder similar to chronic arthritis.
During her recovery stay, the client found our number and contacted Norman Schell, head of Debt Relief Services (DRS) and was taken on as a client. She worked with Adam Gleason of Second Wind Consultants, the parent company of DRS, and completed an Offer in Compromise package within thirty days of signing on as a client. The SBA accepted an offer of $15,000.00 in payments to absolve the approximately $100,000.00 debt one month to the day after submission of her original package.
Total Debt Outstanding $101,248.00
Payoff of Personal Guaranty: $15,000.00 in three payments.
Total Debt Forgiveness: $86,248.00
Attachments:
Health Foods StoreArkansas
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Retail Case Study
This retail computer hardware business was purchased in 2006 using a $1.5M SBA loan. In the first several months of operating the business, sales did not match financial projections, and the downturn in the economy in 2007 led to increasing difficulty and eventual inability to support their monthly debt service. They floundered for several years, liquidating all personal funds in order to keep the business alive. By early 2010 the owners came to us because they wanted out of the business but were still facing over $1M in personally guaranteed debt to the SBA. We wound down the company and negotiated with all creditors to settle the owner’s personal guarantees.
Total Debt Outstanding: $1,073,000
Payoff of Personal Guarantee: $20,000
Total Debt Forgiveness: $1,053,000
Attachments:
Computer Hardware RetailerFlorida
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