Betty The Restauranteur

[TheSHAD0W]

Because interest rates are going up, you're going to hit a point where the opportunity cost for the money the restaurant is worth becomes greater than what payments you're getting out of it. It might be a good idea to actually go and foreclose before that happens.

[Tanasi]

So until Uncle Sugar puts a pad lock on the place tax payers are floating her a "loan" that has no hope of being paid?

[Tama]

So >$100k in loans and liens. Unless she gets another inheritance I think this might be it.

[Ghel]

Because interest rates are going up, you're going to hit a point where the opportunity cost for the money the restaurant is worth becomes greater than what payments you're getting out of it. It might be a good idea to actually go and foreclose before that happens.

The restaurant isn't worth anything if we can't sell it after we foreclose. And the way the market is in our little town, I doubt we would be able to sell it for enough to pay off the loan and recoup our legal fees.

It actually makes more sense to let the property go tax forfeit and let the county take it. We'll keep getting the automatic payments from her checking account (when there's money there). We have an Small Business Administration guarantee, so they'll cover about 75% of the remaining loan amount. Then we would write off the rest. It would probably be less than legal fees if we foreclosed.


Tama, I've been thinking this might be it for years. Somehow, Betty has continued to hang on by the barest thread.

[taxguykarl]

Can't say I'm surprised: bad decisions, worse decisions

[Arcus]

Betty is going to keep doing this until her house of cards falls simply because she has gotten away with it for so long. I believe that she thinks that what she is doing is just the ways you do business.

[Blue Ginger]

Are her staff and suppliers at least getting paid? Or do they not have any idea what is happening behind the scenes?

[Ghel]

Are her staff and suppliers at least getting paid? Or do they not have any idea what is happening behind the scenes?

Betty keeps coming up with the cash for us to make out money orders for her suppliers. Her staff, not so much. One of her employees continues to come in with old payroll checks to cash, and all we can tell him is that there aren't funds available to cash the checks. I'm surprised he hasn't found another job yet.

[Monterey Jack]

Who the hell would work for an employer who doesn't PAY them?!

[mjr]

I have to ask as well:

I wonder where this money is coming from. It seems like, reading through these related threads, "Betty" will either come up with the money at the last minute (usually thousands of dollars) or just blow it off. I wonder if they're gambling with a lot of it, and that might be the issue.

So I have to wonder where the money's coming from. Especially if she's not able to pay her employees. The first time I didn't get paid when I was supposed to be, I'd be out looking for a new job.

With everything Ghel has told us, I'm actually a little surprised the bank has been as lenient as they have seemed to have been, considering this thread started in November of 2014. Nearly four years ago.

[Blue Ginger]

Betty keeps coming up with the cash for us to make out money orders for her suppliers. Her staff, not so much. One of her employees continues to come in with old payroll checks to cash, and all we can tell him is that there aren't funds available to cash the checks. I'm surprised he hasn't found another job yet.

I'd be demanding to be paid in cash and have my own receipt book for her/manager to sign at the end of every shift. No way would I work without getting paid.

And if she can't always pay her employees, I'm betting she isn't paying the IRS the taxes relating to payroll either. What would happen if an employee called the IRS on her? Would the employee have to pay the taxes that she didn't? Or would they be in the clear and IRS go after her/the business itself?

(I know that the ATO (Oz Tax Office) will go after the employer for unpaid taxes, unless the employee is actually a contract and should be lodging and paying their own tax, super, etc.)

[Deserted]

I'd be demanding to be paid in cash

...daily. But more likely I would've quit long ago.

[Ghel]

... considering this thread started in November of 2014. Nearly four years ago.

Don't forget there were two threads before that, linked in the first post on each thread. I got involved with this customer in 2008, back when I was still new to loans.

To answer everybody's questions (a lot of this is guesswork on my part):

Betty has very few employees. The one who has stuck with her the longest is her daughter, but I don't know why even she is working there, knowing her mom's business is doing so poorly. At least, I assume she knows. She's not stupid.

We've talked a bit about the tax consequences for her employees in this thread (or maybe the last one?), and it's not good. It sounds like the employees would be responsible for the taxes if Betty's not sending the withholding to the state or IRS.

Betty's husband has other sources of income: sales of timber or cows. They also appear to have a gravel quarry on their land, so they may be selling gravel as well. But we've never gotten updated financial information, so we don't have numbers on any of that. We know they have other accounts at the local credit union and perhaps other banks as well. We have no information on how much they have on deposit there, however. And considering how antagonistic her husband has been when we've met with him, it's possible he's refusing to use his income to support her business.

[Mental_Mouse]

In the husband's place, I wouldn't use my income to support her business either! A gambling addict is a money hole, and if he has any conception of how bad that can get, it'll be separate accounts all the way.

mjr: The first time I didn't get paid when I was supposed to be, I'd be out looking for a new job.

And I was, when I worked for a Startup From Hell. (Summary: Tycoon Jr. was hoping to catch the wave of the new Computer Age, so he started a software company. I was the fourth employee, and the first even slightly-experienced programmer (And I was between years at college.) Their only product was supposed to compete with MS-Paint -- a freebie for companies to give away with their hardware. Problem was, it was pushed up against the 640K memory limit of the time, needed two diskettes to load, was slower than shit, required specific video hardware, and had an awful user interface. (See also: Three non-programmers writing a paint program.)

The one credible customer I met saw this thing and basically snickered. When Tycoon Sr. shut off the money tap, I went to work for the wouldn't-be customer....

[Ghel]

In the husband's place, I wouldn't use my income to support her business either! A gambling addict is a money hole, and if he has any conception of how bad that can get, it'll be separate accounts all the way.

For the most part, I agree. However, he needs to at least be informed about the restaurant. Those state and federal tax liens are attached to all the real estate Betty owns, so not just the restaurant, but their house as well. As Goodhair has said, those tax liens will likely be with them until they die. And then their heirs will have to deal with them. The state or IRS will probably liquidate the real estate to pay the liens at that point.

Since we're not sure how informed Betty's husband is, we're insisting that they both come in to discuss it all.