On a cold night in October 1988, we found out we would have to declare bankruptcy because my "partner" stole from our business, moved back to Montana and couldn't be found. The ghoulishness doesn't start just there -- we had taken out a loan for $4 million, putting $500,000 down cash to the bank that financed the bowling alley we were to build. During the first two years of operation, Frankenstein Bank had their own financial troubles, unknown to us, and went through four presidents and four audits. The original president agreed to accept interest only the first year of operation, until we could "get on our feet," then to finance the loan for 15 years. The loan was for $3.5 million at 7 percent ... or so we thought.
The bank had a clause in our contract that stated that, if an audit was triggered, for whatever reason, contracts would be renegotiated. Obviously, since they were having money problems, our loan interest rate did NOT go down, but went up, FOUR times. It went from 7 percent to 14.5 percent in four years, and we still owed $3 million on the loan.
A 7 percent loan on $3 million is $17,500 interest only per month, but a 14.5 percent loan costs $36,250 interest only per month. We were losing money. We would have to pay $61,250 for operating the bowling alley, and that did not even include paying on the principal on the loan. On top of that, I found out my "partner" was skimming money off the top of the vending and entertainment machines.
He had skipped town, and the bank held me responsible for the bill. We had to declare bankruptcy.
-- David, Hammond, La.