Shutting Down a Business
It's been an interesting week. My brother-in-law ("bil" as he will now be known) is shutting down his business. It's a family business that has been around for 69 years, but things have changed and he decided to shut it down.
He also personally owns the building that the business was in. He decided to sell the building at the same time, so that he would have nothing left to worry about as he decided the new direction for his life. He's 44, so he has several more years to work and wants to do something that he thinks is meaningful.
So...as things were winding down, he was hit by a lawsuit. He's being sued by one of his building's tenants who thinks that he had an oral agreement to sell the building to. There's a paper trail a mile long showing that he decided not to sell the building to him because he's unreliable at paying his rent and following through on things (among other reasons).
Since my BIL is being sued, though, he's unable to sell the building to new buyers until this lawsuit is settled. It could take up to 18 months to settle the lawsuit. In the meantime, he can't get new renters into the space and he can't sell the building. So, he has to come up with payments for, possibly, the next 18 months until this gets to court. It's a tough row to hoe, but I think he'll make it all right.
From this, I've learned (or been reminded of) the importance of keeping good notes in any financial transactions. Also, when selling (or buying) in a major transaction, it's important to make sure you have a few months running room. If you don't and something unexpected happens (like this), you need to be prepared.
I think the ideal situation here would've been to sell the building first. Get that all taken care of and rent the space back from the new owners for 2-4 months. Use that time to wind down the business, so that one thing is settled at a time. Instead my BIL was hoping for both things to happen at once. Because they didn't work out perfectly, he now finds himself in a difficult situation.
Like I said, I think he'll make it, but it's added a lot of extra stress to his life.
He also personally owns the building that the business was in. He decided to sell the building at the same time, so that he would have nothing left to worry about as he decided the new direction for his life. He's 44, so he has several more years to work and wants to do something that he thinks is meaningful.
So...as things were winding down, he was hit by a lawsuit. He's being sued by one of his building's tenants who thinks that he had an oral agreement to sell the building to. There's a paper trail a mile long showing that he decided not to sell the building to him because he's unreliable at paying his rent and following through on things (among other reasons).
Since my BIL is being sued, though, he's unable to sell the building to new buyers until this lawsuit is settled. It could take up to 18 months to settle the lawsuit. In the meantime, he can't get new renters into the space and he can't sell the building. So, he has to come up with payments for, possibly, the next 18 months until this gets to court. It's a tough row to hoe, but I think he'll make it all right.
From this, I've learned (or been reminded of) the importance of keeping good notes in any financial transactions. Also, when selling (or buying) in a major transaction, it's important to make sure you have a few months running room. If you don't and something unexpected happens (like this), you need to be prepared.
I think the ideal situation here would've been to sell the building first. Get that all taken care of and rent the space back from the new owners for 2-4 months. Use that time to wind down the business, so that one thing is settled at a time. Instead my BIL was hoping for both things to happen at once. Because they didn't work out perfectly, he now finds himself in a difficult situation.
Like I said, I think he'll make it, but it's added a lot of extra stress to his life.
posted by Thomas at 9:25 AM
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