Legal Question in Business Law in Washington

Personal Guarantee: We owned a Norwalk furniture franchise store. The 106 yr old Manufacturer went out of business/bankrupt 9/08. Our store along with many other franchisees has gone out of business.NFC's(Norwalk Corp. franchisor & manufacturer) bankrupcty trustee decided not to pursue franchisees for unpaid invoices, because damages/loss countersuit would be far great $ risk to them. Judge agreed and charged off. but NFC's bank (owed 9 million) asked judge for permission to go after unpaid invoices. Since we went out of business & our personal guarantee was with NFC can Co-America bank continue to pursue us "personally"?


Asked on 2/20/10, 1:26 pm

2 Answers from Attorneys
Charles Cruikshank Cruikshank Law Office-Since 1975

Without reading the documents, I can only guess that the debt represented by the invoices was assigned to the bank by either the bankruptcy court or by NFC as part of its financing. Whether the court or NFC assigned the debt, probably makes little difference. Whether you personally guaranteed the debt is important, as that is perhaps your best defense if you did not.

The above is stated in terms of "probabilities" because I have not seen the documentation and despite 35 years of experience, that is the best I can do without review of the actual documentation.

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Answered on 2/25/10, 3:00 pm
Kevin B. Murphy Franchise Foundations, APC

Not possible to say without looking at all the documentation. In general terms, debt can usually be assigned and if you personally guaranteed the debt, you may be on the hook. Consult with an attorney in your area.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

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Answered on 3/08/10, 9:38 am


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