Client owns a restaurant that survived the pandemic with take-outs. The commercial lease for the restaurant is in the name of client. Client is the sole proprietor of the restaurant. Client obtained PPP loans of $80K, and credit card debt of $120K. All these debts were used to keep the restaurant afloat. At this time, the restaurant is breaking even until it pays $2K each of salary to client and spouse. In other words, with the salary payment of $4K to client and spouse, the restaurant is losing $4K a month.

Client is unable to reach a decision whether to shut the restaurant down, continue operating at a loss, or just wait and see if business goes back to pre pandemic levels when it was actually turning a profit of $10K a month even after paying client and spouse their salaries of $4K a month. 

American Express has just filed a lawsuit against client to recover $15K of credit card debt. So the pressure is on to do something. The lease contract still has 3 years to go at $7K a month. Fortunately, the restaurant generates enough revenues to pay the $7K a month. But there’s no money to pay American Express. Another lawsuit has just been received. Citibank has filed a lawsuit to recover $12K of credit card debt. Client feels like the sky is falling, on them.

Time to throw in the towel?

Given the two lawsuits in progress, the potential of owing $250K on the lease for 3 more years, the PPP loan of $80K, and $120K of credit card debts, client really feels like throwing in the towel and just driving for Uber. I have clients making $10K a month from Uber and Lyft without deducting expenses. They should net about $6K a month. That’s pretty good. I had a client last year that was grossing about $6K a month with Uber and Lyft. It provided good income while he was in good health. But then he got diabetes. He said he just gets too tired to drive when his sugar level is low and just wants to sleep in the car. After he discharged $70K of credit cards, he and his wife went back to their country of origin and retired there, living comfortably, with both of the social security benefits. He just sent me an email saying that they are living a stress free life there and should have done their Chapter 7 much earlier. 

Let’s say that client decided to file for chapter 7 bankruptcy what will happen to the restaurant? First, client has to make a reasonable assessment of the market value of the restaurant. If the restaurant is located in a good place, then the restaurant might be worth something. The Chapter 7 trustee will be interested to sell the restaurant. If there is a buyer for the restaurant, let’s say somebody offers $30K for it, and none of it is exempt, then the trustee will sell the restaurant and use the proceeds to pay the trustee administration fees and use the rest of the money, if any, to pay the creditors.

Is there an exemption for the restaurant?

If there is an exemption for the restaurant using the wild card for instance, plus tools of trade possibly for the restaurant equipment, the trustee will probably just abandon the restaurant back to client. Client can then decide whether he wants to continue doing business without the burden of the $80K of PPP, the $120K of credit card debts, and the $250K of future lease. Of course, the monthly still has to be paid, but if he gives up the restaurant he won’t owe the $250K of future lease.

Some trustees believe the commercial lease itself is worth something. I don’t really know why but some of them do. In this situation, the trustee will determine that the lease is worth a certain amount, and ask the client to offer him a settlement to buy the lease back from him. This is to put pressure on client to settle with the trustee on the lease if client wants to continue operating the restaurant.

It’s essential during this time to maintain liability insurance for the restaurant. Without liability insurance, the trustee will ask client to shut the restaurant down because the trustee is concerned that if an accident happens in the restaurant, the trustee as administrator of the bankruptcy estate, can be sued by the accident victim, so he will need insurance to cover potential claims if the restaurant will continue operating while client is still in Chapter 7.

What is the business really worth?

Another client owns a home health care business that he sold to his daughter 3 years ago. He says the business has no value. But based on his tax returns, the business is still grossing $1.0M a year in revenues, and still showing a profit of $50K in 2019 before the pandemic. This can become a big problem if client files for Chapter 7. First, it doesn’t look like the business is not worth anything. Similar businesses with the same revenues are for sale with asking prices of $150K to $300K. So, there’s something in this that is not right. The trustee will definitely make an issue about the value of the business. Second, client sold this to his daughter 3 years ago but it’s still his own tax returns that show the income of the business. The sale of the daughter is a sale to an insider; she being a family member, and that alone would make the sale be presumptively done to defraud creditors. The fact that the business revenues are still in the tax returns of client is a big red flag showing that the business, even if already sold to daughter, is under his ownership and control. We would expect that the trustee will file and adversarial complaint to get the business back into the bankruptcy estate, and thereafter sell it if the court agrees with him.

Whenever there’s a business involved, there must be extreme caution unless client is already willing to give up the business.

If you have too much debt and need relief, please set an appointment to see me. I will analyze your case personally. 

DISCLAIMER: NONE OF THE FOREGOING IS CONSIDERED LEGAL ADVICE FOR ANYONE. EACH CASE IS DIFFERENT.  THERE IS NO ABSOLUTELY NO ATTORNEY CLIENT RELATIONSHIP ESTABLISHED BY READING THIS ARTICLE.

PRAYING ALWAYS HELPS

It also helps to pray to our God, His beloved Son, Jesus Christ, and the Blessed Mother Mary for divine protection against financial problems, because we have a God who loves us and His beloved Son, Jesus Christ, showers us with infinite mercy. All we have to do is humble ourselves and pray to the Sacred Heart of Jesus for a drop from his ocean of infinite mercy. Jesus revealed in 1930’s to Saint Maria Faustina Kowalska of Poland that all sinners which we all are and those who do not believe in God and those who do not yet know Jesus, should all be brought to His sacred heart and be submerged in the ocean of His infinite mercy, for the sake of His Sorrowful Passion. Anything you ask for when you pray the chaplet for His divine mercy will be granted, if compatible with His will. Moreover, you are guaranteed a peaceful death.

What is the current proof that God and Jesus are divine and all powerful? I refer you to exhibit A, the incorruptible body of Carlo Acutis!

CURRENT ONGOING PHYSICAL PROOF GOD IS ALMIGHTY 

INCORRUPTIBLE BODY OF CARLO ACUTIS DIED 2007 AT AGE OF 15

Look at the incorruptible body of the blessed Carlo Acutis who died at 15 in 2007. You can look at his body in Rome, Italy, now 14 years after his death. He looks like he’s just asleep in his jogging suit and rubber shoes!  That is a perfect example of an ongoing sign on earth that the God of Moses, our God, my God, is almighty and all-powerful that He even suspends the natural laws of biology and physics without any effort. He resurrected His one and only beloved son from death on the cross. Indeed, He has power over death.

I have actually thought, “What would the other religions believe if they actually saw the incorruptible body of the blessed Carlo Acutis? I think even Buddha, if he were alive today, would truly believe that Yahweh is the one True God.” No need to think about reincarnation and nirvana because his incorruptible body is available for all to see in Rome, Italy. We won’t need any kind of explanation on the efficacy of modern day mummification. Come on, man, that’s all bull. The truth is in plain sight. Believe your own eyes that the one true God is all-powerful and His name is Yahweh, “I am who am.” He is the alpha and the omega, the beginning and the end.

“ETERNAL FATHER, WE OFFER YOU THE BODY, BLOOD, SOUL AND DIVINITY OF YOUR DEARLY BELOVED SON, JESUS CHRIST, OUR LORD AND SAVIOR, IN ATONEMENT FOR OUR SINS AND THOSE OF THE WHOLE WORLD, FOR THE SAKE OF HIS MOST SORROWFUL PASSION, PLEASE HAVE MERCY ON AMERICA AND THE WHOLE WORLD.”

Lawrence B. Yang is a graduate of Georgetown University with a Master’s Degree in Law and specializes 

in Bankruptcy, Business, Real Estate and Civil Litigation.  He speaks English, Mandarin and Fujian 

and has successfully represented thousands of clients in California, including companies overseas.  

Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 20274 Carrey Road, Walnut, CA 91789 or 1000 S. Fremont Ave., Mailstop 58 Building A-10 South Suite 10042 Alhambra, CA 91803.