The Collectibles by James J. Kaufman

with the banks. The jury’s not in on whether the bailouts will help or not. We argue about that every day around here. The only two stores where you own the real estate are East Bay in Chicago and Charlottetown. The North Carolina real estate is already encumbered by first and second mortgages, not to mention the Uniform Commercial Code’s securing the collateral. There is very little, if any, equity remaining, particularly since the refinancing we completed last November for East Bay. The rest of the stores are leases, and the franchisors have been pressing your stores with such a demand for site improvements, I doubt that you have any real equity in the leases.”
    Preston rose from the table and strolled over to the floor-to-ceiling window overlooking the west side of Manhattan. He stared out, his nose close to the windows. He could see his breath on the glass. He watched the cars running like ants up and down the West Side Highway and the boats on the Hudson River. The sky was filled with planes servicing Newark, Tetterboro, and other airports. He looked over at Casey, who still had his hat on. Casey returned Preston’s look, shaking his head. Preston could see moisture behind Casey’s thick lenses.
    â€œBut, Andrew, what’s our solution?” Preston demanded.
    â€œOur group has reviewed this, not only among ourselves, at length, but also with our commercial people, our real estate people, our financial people and our bankruptcy . . . advisors. Although they are not actually our people but a firm specializing in the actual handling of bankruptcy matters. While there have been some differences of viewpoint among the groups, the ultimate consensus is to file for protection under Chapters 11 and 13 of the Bankruptcy Code, with an individual filing under Chapter 7 of the code to follow for you and Marcia.”
    Hearing the name of his wife jarred Preston and added a new dimension to his growing fear. He wished he could stop the words rushing out of Andrew’s mouth.
    â€œAs you are aware, Marcia has personally guaranteed the debt for all of the stores,” Andrew said in a low voice. Preston slowly nodded.
    â€œExcept East Bay,” Casey mumbled.
    â€œYes, except East Bay. But again, in the overall picture, that does not make a material difference. The problem is that in the filing of a Chapter 11 proceeding, which deals with the businesses only, there probably will not be enough unencumbered assets to survive the filing and be of use to you. Even if there are sales, the trustee in bankruptcy will be doing the selling. It will take years to go through it, and the banks do not have to wait at all before going after you and Marcia on the notes – and pursuant to the Personal Guarantees – without waiting for the results of the suits foreclosing on the collateral. The only thing that will stop the tide is bankruptcy. By law, all the creditors will have to stop hounding you. They’ll still be there but will have to work through a creditor’s committee. And the Trustee.”
    â€œIf we file for individual protection under Chapter 7, these damn banks will take everything we have. We’ll lose our Trump Tower condo, our home, and we’ll lose all of our stores and all of our real estate. What’s left? Personal belongings?”
    â€œYou have no choice, Preston. Besides,” Andrew said, playing his last card, “your best chance for keeping this civil is bankruptcy.”
    â€œWhat the hell does that mean?” Preston asked, knowing at the same time exactly what it meant.
    Andrew entered into another lengthy lawyer-like dissertation, more in the nature of an Artful Dodger disclaimer, including why Chapters 7 and 11 might not work depending on how the SOT was viewed.
    â€œAre you telling us we could actually go to jail over this?” Casey asked.
    â€œWell, we assume that the money that would have otherwise gone to the bank to reduce the