Bankruptcy and the SBA Loan, Common Problems and Simple Solutions


May 15, 2013

By Bob Coleman
Editor, Coleman Report

GregKDuring our Bankruptcy webinar yesterday featuring Greg T. Kupniewski from Starfield & Smith, P.C. we had so many great questions from our attendees that we thought we would share some common problems and simple solutions regarding SBA loans and bankruptcy.

Here are the questions from our audience. Please click here to view the answers.

Q: SBA approves $10,000 for litigation expenses, if the legal expenses has passed the $10,000 mark and we have an idea from the Legal Counsel of how much the overall legal expenses will be, when do we request the increase of the litigation budget.

Q: Should instance raise for the benefit of the lender does SBA need to approve carve outs? With crammed down of principal?

Q: Can Guarantors, by filling BK, remove themselves from their guarantors liability, even if the Lender has filed proof of claim?

Q: If the Borrower files BK Chp 7 or 11, and they don’t cooperate on providing access to the premises, how to complete the site visit and inventory count or valuation.

Q: If the Court on Chp 11 crams down the balance of the SBA 7a loan, when do we let the SBA know about the reduction of the loan principal balance and provide a liquidation plan.

Q: Stays also stops the right of the Lender to pursue Updated Financial Statements?

Q: If the SBA didn’t get notification prior to the vote of the reorganization plan, has the lender jeopardized the SBA guaranty of the SBA 7a loan? or what would be the remedy. Assuming the plan has been approved and put in place, and the Borrower is performing after the plan.

Q: The follow up question to that would be if the Lender was not notified on time about the Guarantors filling of BK, does the Lender has any recourse to file proof of claim after the court deadline to file it?

Click here to view all of the answers

Recorded during Coleman’s “Bankruptcy and the SBA Loan — Five Issues You Must Know” Webinar on May 14, 2013.

Greg Kupniewski focuses his national practice on representing financial institutions in business restructuring, bankruptcy and financial services matters and other creditors’ rights issues. He has extensive experience in all facets of bankruptcy litigation and transactions, including asset purchases and other types of acquisitions. Greg also develops risk management strategies to mitigate his client’s losses when their customers enter bankruptcy.