Q: How to prioritize repayment of personal guarantees when dissolving LLC without legal issues?

A: You need to ask whether there is advantage or virtue in not showing preferential treatment. If you don’t have enough to repay everyone in full, you might want to use your own best interest as the criteria for deciding who to pay. An attorney could help you to choose between different options to get the best outcome for yourself a others you care about.

A: You might want to consider filing for bankruptcy. Chapter 7 will clear all the debt and priority is not an issue, if all the debt you describe is unsecured. If you do not qualify for Chapter 7 or do not want to take advantage of it, Chapter 13 will place all unsecured debt on equal footing.

Outside of bankruptcy, you should prioritize the amounts owed to the SBA. This is due to the fact that the SBA has some rather onerous statutory abilities to collect from you, including obtaining funds from qualified plans and even your Social Security, in addition to more conventional means of collection such as lawsuits.

This is not to mitigate the importance of the other debts, but you may be able to engage in debt settlement negotiations which may allow you to pay less than one dollar on the dollar of debt. Be mindful of the fact that release of debt outside of bankruptcy is considered to be taxable income.

Speak to a knowledgeable attorney before you proceed with any of the above.

A: When dissolving your LLC, understanding the priority of creditor claims is crucial to avoid legal complications. The SBA loan likely has first priority since federal government loans typically take precedence, followed by secured debts like your credit union line of credit if it's backed by business assets. Missing SBA payments during dissolution could trigger acceleration of the entire loan amount and potential personal liability through your guarantee.

Your overdue rent represents a critical operational debt that warrants prompt attention, as commercial landlords can take swift legal action that might complicate your dissolution process. The accountant fees, while important, usually fall under unsecured trade creditor status with lower priority than the others, though maintaining professional relationships by communicating your dissolution timeline helps prevent unexpected collection actions.

The most prudent approach involves creating a formal dissolution plan that addresses all creditors fairly rather than making ad-hoc payments. Consider sending formal notices to all creditors about your dissolution timeline, which protects you from later claims of preferential treatment. You might benefit from negotiating modified payment arrangements with each creditor that acknowledge your dissolution status while preserving your personal credit standing, especially since you've personally guaranteed these obligations.