Can our LLC answer a law suite pro se in an out-of-state case even though we have never done business in that state?

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Can our LLC answer a law suite pro se in an out-of-state case even though we have never done business in that state?

Our small LLC business was formed in SC in 2006. We owned a small bistro under this business and struggled for 3 years to keep it open. We were forced to closed 4/1/10 due to federal and state tax issues; we could not continue to operate in the red. At the time of closing we had borrowed funds from a company based in TX which pursued our business by phone and we borrowed against the future receivables of the bistro. We also had to personally guarantee the loan. We are being sued on the business as well as personally and we have no funds for an attorney.

Asked on February 21, 2011 under Business Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You may represent yourselves personally pro se, but not your LLC--the LLC will need an attorney. (A pro se litigant may only represent him- or herself--but the LLC is not your or partner(s); it's a separate legal entity.)

Check your guaranty of the loan--did you give up any defenses (which is not uncommon--often on guaranties, the guarantor waives all defenses other than payment). If you have not given up defenses you would want to interpose, you may be able to simply ignore the business-which is closed anyway, apparently--and only defend yourselves pro se. If you have personally waived defenses, however, you may need to have the LLC defend (so it can raise relevant defenses), which would require having the money for an attorney.

However, another consideration: do you truly have any defenses? That is, if you borrowed the money, guaranteed the loan, and the LLC defaulted, then unless there was fraud, or you have some counterclaim to interpose as an offset, you will almost cerainly lose in court: when you borrow money and don't repay it, a court will typically find against you.

If you have not valid defenses, you may wish to consider whether it's worthwhile defending the action--or if maybe you should accept the judgment and then possibly declare bankruptcy to discharge the debt. If you can't afford an attorney, you may be in such financial shape that declaring bankruptcy is a good, or even the best, option.


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