Legal Question in Business Law in Virginia

Re: There must be a way out. LLC and bankloan related catch22

It is best that an attorney review the LLC and bank loan documents before reaching any conclusions. That said, it is, in theory, possible that as between the members, none was required to make further contribution to the LLC and, at the same time, each be individually obligated to the bank. Again, it is best to have all the documents reviewed by legal counsel.

Re: There must be a way out. LLC and bankloan related catch22

This sounds way too complicated to give any

meaningful answer in this kind of forum. Most

of the questions are fairly straightforward. This

is clearly not, and also will depend on the

exact wording of a number of different legal

documents which we can't guess about here.

However, in general, I think you are starting off

with a false assumption. The concept of a

"limited liability corporation" (LLC) like a

corporation is that the owners are NOT personally

responsible for the debts of the enterprise. So

one chooses an LLC or a corporation precisely to

make sure that the individual owners will NOT

be personally liable or responsible to pay for

the debts of the company.

Therefore if the loan for the purchase of the

radio station is owed by the LLC, then by

definition the company itself is responsible

(to the extent it has any money) but the

individuals are NOT personally responsible.

In other words, any time someone signs a contract

with an LLC or a standard corporation they are

taking the risk that the company will not have

enough money to pay what is called for under

the contract.

Now, on the other hand, because of this risk,

most businesses will refuse to sign a contract

(or loan) with an LLC or corporation unless the

owners sign a separate agreement to be personally

responsible for the debt. So it is very unusual

for anyone to take the chance by signing a

contract only with an LLC without a SEPARATE,

additional agreement of the individuals to be

personally liable as well.

But that would depend on what the contracts actually say.

In general, if the owners are not willing to

make sure this project works, you probably should

be looking for new investors and see if they will

assume the responsibility for the cost of making

the radio station work.