SBA Loan Default: Bankruptcy
Dealing with an SBA OIC case can be hard. You should allow one of our lawyers to settle SBA debt on for you. Talk to us about your SBA loan default today.
This is a re-post of articles about Minnesota State Senator, Sean Nienow and his wife, Cynthia, who, along with their company, National Camp Association, Inc. have been sued by the United States Department of the Treasury for approximately $748,000 in connection with an SBA loan default.
The lawsuit was filed January 17, 2014 with the U.S. District Attorney’s Office in Minneapolis for failure to make payments on a $613,000 small-business loan.
The complaint states that on January 16, 2009, the Small Business Association (SBA), through U.S. Bank, provided a loan to National Camp Association, Inc. The note was signed by Sean Nienow as the president and secretary of National Camp Association, Inc., and was personally guaranteed by the Nienows.
According to Isanti County court documents, Sean Nienow purchased the assets of National Camp Association, Inc, a New York corporation, for the amount of $699,000. He paid $621,000 on January 22, 2009, the day of closing, and promised to pay $30,000 plus accrued interest by January 16, 2011.
On October 11, 2011, Nienow and National Camp Association, Inc. were served with default and failure to make payments on any of the $30,000 or accrued interest, according to the lawsuit filed in Isanti County.
Isanti County District Judge Edward Bearse ordered Nienow to pay $7,755 to the New York company.
The business, described by various news sources as an organization helping parents find camps for their children, filed with the Minnesota Secretary of State on May 29, 2008 with Sean Nienow as its chief executive officer.
The registered office address was an unlisted address next to the Nienow’s home in Cambridge.
“There was no letter or permit application for a home occupation permit for the camp business,” said Lynda Woulfe, Cambridge city administrator. “It would have required one because they were conducting business out of the home.”
The intent of the home occupation permit is to allow limited passive commercial-type uses in a residential area to not detract from the character and integrity of residential neighborhoods. The home occupancy statute lists conditions and provisions such as utility usage not exceed that which is normally associated with the residence.
The U.S. Bank loan was guaranteed through SBA. This is usually done when the bank wants to loan the money, but the company may not have a lot of collateral, said Royce Nelligan, SBA district council. The SBA guarantee is typically 70 percent of the total loan.
The complaint states that the Nienows stopped making payments on the loan in July 2010. The principal balance is for $558,076.53. With administrative costs, attorney’s fees, and postjudgement interest, the lawsuit is asking for $747,937.62.
National Camp Association, Inc. was dissolved August 1, 2012, according to the Secretary of State’s website.
The complaint states demand for payment was made, but the defendants have not complied.
Nienow released a statement that the lawsuit is not related to any of his legislative duties. He is not taking any calls on the case.
“I have not yet received a copy of the legal filing in question,” Nienow said in his statement. “But it is clearly not related at all to any of my Minnesota Legislative duties. As with all pending actions of this sort, discussion of any details cannot take place until it is fully resolved.”
Nienow had previously served two terms, starting in 2003 and 2005, but was unseated by Rick Olseen (D-Harris). Nienow won back his seat in November 2010, and has held two additional terms, starting in 2011 and 2013. His seat is up for election in 2016.
You should not have to struggle to settle SBA debt on your own. Instead, turn to one of our attorneys who specializes in SBA OIC and DOT collection claims. We are dedicated to helping you settle SBA loan default.
If you are struggling with circumstances that involve SBA loan default or DOT collection action, you deserve professional help! Our attorneys know how to settle SBA OIC and DOT compromise cases. If you contact us, we can help you settle SBA debt once and for all. After you schedule an appointment, you confer with a dedicated SBA OIC and DOT Practitioner who helps you through your administrative legal battle. After your claim is resolved, you never again have to worry about your SBA loan default or DOT collection problem haunting you. Our team of lawyers has assisted many clients through the years. Now it is your turn! You truly can settle SBA debt for good!
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
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Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Client’s small business obtained an SBA 7(a) loan for $750,000. She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance. The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance. However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.
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