Negotiating Debts and Clearing Liens before Closing

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by a searcher from University of California, Irvine
in Irvine, CA, USA

3mos ago

Negotiating Debts and Clearing Liens before Closing

I have a purchase option for a distressed California-based business that currently has approximately $2 million in outstanding debts and liens. I was given a limited power of attorney to negotiate these obligations, which include a mix of SBA loans and merchant cash advance loans. Ideally, I would like to arrange settlements so that the debts are paid simultaneously with the closing. Would it be advisable for me to handle these negotiations myself, or should I engage a law firm or specialist who focuses on debt restructuring? If outside assistance is recommended, I would appreciate any referrals to firms or attorneys experienced in negotiating SBA and MCA debt in connection with business acquisitions.

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reply by an intermediary 3mos ago
from Mount St. Mary College in Orange County, NY, USA

I would and have negotiated things like this in the past, myself. Once its ready for signature engage experienced counsel to review any documents being signed. I would also consult legal and accounting advisors during the negotiation but find principals often achieve the best results leading the negotiation.

reply by a professional 3mos ago
from University of Virginia in Holmes, NY 12531, USA

Hi, Tien - and thanks, as always, ^redacted‌, for the tag. I’d certainly recommend using counsel, be it legal, restructuring advisory, or both. One legal note to bear in mind - if there’s genuine chapter 11 risk for this company even after you’ve made best efforts to reach resolutions with the creditors, technically some of the payments made could be become subject to the U.S. Trustee’s avoidable preferences powers (not saying it’s likely - and would really only come into play if you can’t reach pre-close terms with significant creditors - i.e. if you satisfy them all, none of the payments are preferential). Of course, I also assume you’ll simply decline the option if you’re not satisfied you’ve gotten the financials/cap stack to a better place upon expiry. Glad to chat on this if I can be helpful - redacted Good luck and best, Matt