379. Bankruptcy case completed, selling the business assets, party city bankruptcy

Chapters

• 1:03 Gym Sale Update and Complications
• 5:03 Asset Limbo: Bank vs Buyer Standoff
• 5:51 Personal Bankruptcy Hearing Progress
• 10:16 Party City's Bankruptcy Revelation
• 11:41 Business Failure Is Not Personal Failure
• 14:01 Final Reflections on the Journey

Transcript

Speaker 1: 0:32

Hello, hello. So we're going to do an update today, both on the business being purchased by the new owner our personal bankruptcy scenario and just an economic-wide thing, for bankruptcy Just is an interesting learning. So first off, with the gym, it's been bought by the new owner, kind of just an odd twist. So when I shut the place down and corporate said they'd handle the chargebacks and stuff, they asked me to refund everything I possibly could so that they could handle everything. I said sure, sounds good. So I wired them all the funds and was taken care of.

Speaker 1: 1:10

I heard from the new buyer this week like hey, I'd like to buy some of the equipment. It looks like you, nathan, your LLC currently owns the assets. Hey, I like to buy some of the equipment. It looks like you and nathan, your llc currently owns the assets. I like to buy those um. And then he pitched a lowball offer. That was kind of surprising, um, but he said he's also saddled with having to pay for the chargebacks that I wasn't able to reimburse. So that was just kind of interesting. Um, corporate had told me they were going to handle it and it looks like they're having the franchisee handle it. So that was. I was unfortunate for the new buyer. Uh, that should not be their responsibility in my opinion, but anyhow, uh, apparently the new buyer is taking that on. So there they go. Um, what else, what else? Uh, going back and forth. So tech, it's weird.

Speaker 1: 1:53

So I part of my timing, for when I closed the studio was because my lender was saying hey, if you're 90 days late, uh, if you don't make payments, we will start seizing assets. Like I thought, hey, we're gonna do it in the next like couple days, and it happened to be the start of the month, so I thought it was pretty good timing all around. And lo and behold, to this day, like, assets have not been seized, and it's been a month and a half since I closed the studio and shut the business down. And the bank is saying hey, nathan, these assets are still yours. We would like you to make a sale to the buyer and then we'll figure out whatever you sell them for. Like, you can write a check to us for that. So that was weird. I thought I was done with all the assets, and now the bank wants me to sell the assets, which are technically still mine, and then, like they would figure it out. And so it's just weird.

Speaker 1: 2:44

At one one moment they're telling me they're gonna seize assets and liquidate and it's been 45, almost 60 days and they haven't followed through. So uh, kind of surprised I didn't realize it would have gone that much slower, slower, so that was a little strange. But right now, right now, it's kind of goofy. So the sellers asked me hey, nathan, can you write up the purchase agreement for what I am buying from you? And I told him, like, well, no, like, you're the buyer.

Speaker 1: 3:11

When you buy a house I'm thinking when you buy a house the buyer writes up the purchase agreement. When you make an offer to buy a business, the buyer writes up the offer and the seller approves it or not. And right now the seller is asking me to write the purchase agreement. Well, no, sorry. He asked the uh, uh, the buyer of the franchise, which I guess it's now up and running. Uh, he's trying to buy it from the bank and the bank has asked me to write up the purchase agreement. Which is kind of strange because I don't think they realize my incentive to be involved in this. And here's where it sits If I do nothing, the bank seizes the assets and it takes no time or emotional investment on my part to do anything.

Speaker 1: 3:58

So my cost of doing nothing is zero because I'm going to lose all the assets anyways. But if I spend time and energy and I, let's say, I draft the purchase agreement and the buyer signs it and then we send it to the bank because the bank has to approve it, the bank says nope, we don't like that, try again. I'm now spending my time, my energy writing up somebody else's purchase agreement for something that I have zero gain from, and so the buyer doesn't want it. The buyer doesn't want to write it up, the bank doesn't want to write it up. I don't want to write it up. So I think I'm just going to sit around and not write it. Like if I do nothing, the bank is going to seize the equipment. If I spend a lot of time and energy on this, then the buyer buys it, the bank seizes the equipment and then they go sell it. So I'm kind of confused as to why I'm involved in somebody else's thing. Like the bank has to approve this before it can even go through. So everyone else is kind of sitting on their hands. Like I'm not going to write the paper, you write it. And I told him like no buyer, you need to write this. And he asked. He asked the bank to do it. Bank has asked me to do it, so it's like everyone else do it besides me, so I'm not sure. That's just kind of a weird thing. So that's where that's it. Um, I guess, technically, the owner is using my equipment and they've bought no equipment and they're complaining about the equipment and it's just weird. So that's where that's at.

Speaker 1: 5:20

With the bankruptcy hearing Last week we had the hearing. Apparently, you get three strikes or you're thrown out, and this was our second attempt. The bankruptcy trustee said hey, I have all your papers. Everything looks good. We did the whole thing. Raise your right hand. Are you telling the truth, the whole truth, anything but the truth. Are these all your assets? Yes, are you hiding anything? No. Uh, did you list everything? Yes. Do you have you ever done this? No, no. And it's just all these things that they go through.

Speaker 1: 5:48

And so the way it finished up, it was about she spent like 30 seconds confirming we're good to go and then asked us like 20 minutes of questions and basically, at the end we have like some collectibles, some things of value that we would rather turn over and give away as part of our estate, I guess, rather than try to hang on to it. And so the trustee said okay, um, we're going to tie that up as part of your seizable assets. I'll send you my address and then just please drive it to my office across town, it's like 45 minutes away. She said can do, will do, and haven't received her address yet. And it's been like a week, week and a half. So that's kind of strange. Our attorney says yeah, I haven't heard anything either. Just hang tight, eventually she'll send it over. So apparently we're all done.

Speaker 1: 6:36

Our hearing is over, our verdict is done. There's no follow-up, is what it seems like. So now we just wait and we'll deliver some valuables and then we'll write a check for whatever estate we owe to the courts and then I guess that'll get dispersed to the bank, to the seller finance note, to everybody, and so for now we just hang tight and wait for that. It's not going as quick as I thought, but that's fine, that's okay. Uh, anything else did you see? That's it for the closing. It's it for the bankruptcy side. Um, day job is going fine. Um, oh yeah. And then economics, white shopping. So I hope I've told this story before. I don't think I hope I have. If I haven't here it is.

Speaker 1: 7:20

So back in college I actually worked at a car dealership here in the twin cities and it was great. I loved that job. I was one of the guys that moved the vehicles whenever they need to move to a different part of the the parking lot cars going on the show floor, off the shore floor. I was like the car mover they call it like a lot runner, l-o-t, and on occasion I signed up actually to drive people back home if their car was going to be maintenance for a long while, and so it was a very fancy dealership. I won't drop the brand, but it was a very fancy dealership. And one time they said hey, nathan, you know it's end of day, this guy's car is not ready till tomorrow. Can you drive him home? I said, sure, no problem, I like doing that. So, um, I carved my choice. I picked the. They told me to use a nicer brand, nicer model of the vehicle brand, and so that was an odd thing.

Speaker 1: 8:13

Uh, pick up the customer. He's probably 70 years old, very nice gentlemen, uh, and we hop in the car and start driving back. We just talk a little bit, make chit chat and we get to a very nice neighborhood. It looks like the neighborhood from home alone. It was kind of strange.

Speaker 1: 8:27

So I asked, like you know what line of work are you in? He said I'm a business owner, like a c-level type person. So I asked like, oh cool, what kind of business? And he said, well, and he told me a company name. I couldn couldn't remember it. He said, basically we were the, we are the competitor to party city, and we weren't able to. We weren't able to beat him and so, uh, after a while they ended up having to close the doors, declare bankruptcy and shut the business down. It's like, oh man, I'm so sorry that must've like he must've lost everything. How'd you get back up to where you are now? So I didn't lose anything. It was a corporate bankruptcy. I was not personally invested. The company went under. I still got my salary and my compensation and I just moved on.

Speaker 1: 9:12

And I was surprised that a company can have a failure and the people managing or even owning I think it was just like a CEO or a CTO. He was a C-level, I guess, if I remember correctly, and he did not personally suffer because the business failed and that was my big takeaway. And he lived in a very nice home. It looked like the next door house to the home alone house. That was just a surprise to me that that was even a possibility. Loan house Um, that was just a surprise to me that that was even a possibility. And just like two or three days ago in the U S? Um party city, like the number one balloon and party event planning retailer, they shut down and like they were the only like retailer to really do that. And people are saying, because of Walmart and Amazon and other things, party City is getting shut down. And so that blew my mind that that was even possible. And so all I have to say just to take away, like 12 years ago I guess this guy did not fail because the business he was leading failed and he's just fine. And seeing today like Party City is done, that was just surprising. So I mean, right now there is someone who's driving around town and they were the leadership of party city and they're gonna be okay, the employees will be okay, the sea levels will be okay, um, but it's just a business failure. Uh, here we go all right. So I had to put the phone down for a minute. So that was just surprising, um, and it just happened to be that party city folded.

Speaker 1: 10:59

So in this phase of life where we are personally declaring bankruptcy and in a lot of ways feel like personal failures, it's a reminder that that's not necessarily true. It's okay to have a professional failure. It doesn't mean it's a moral failure or a personal failure, and it's easy to say now because of all the time of working through it, but in the heat of the moment it feels like everything about you is a failure. So I just want to encourage people that is not the case and do not impose more depression on yourself because you messed up in one area. Now it's possible to fail in multiple areas all at once. That is absolutely possible, especially if you're a scammer or a crook. You can have a business failure and a personal failure. It's not like you can only fail in one area at a time. But all that to say, uh, it was just the time of our personal bankruptcy and party city bankruptcy and I'll just I'll never forget that conversation.

Speaker 1: 12:02

There's probably five or six things I saw, or memories that are core memories that happened at working at the dealership that just blew my mind and just changed my perspective on the world now is one of them. That was one of the five. So interesting in general, because of the time of things, we're just going to stop there today. Lots of stories, lots of things. I don't know if there's going to be a whole lot more. I'll probably do a couple more episodes, but I think we're near the tail end of the bankruptcy story.

Speaker 1: 12:33

And I guess for the podcast, it's crazy. When I wrote the intro for it I don't know why, but I'd call it the reality before, during and after buying a business and it just rolled off the tongue and after the fact I realized, like, am I like preaching doom over my future? And no, I'm not. I just flowed and it was like it was my second take recording the intro and it was just too fluid to redo and so I kept it and I didn't realize that the business would actually close. I truly thought I was on my way to five studio, five gyms within five years, and we're on our track to zero gyms after one year, which is pretty crazy. Um, so that's where we're at right now. God is good, life is good and we're going to take on the day and we'll just stop there. So that's where we're at, that's where we're going. Let's rock and roll. We'll finish off this podcast strong.