

Ask HN: HSBC is holding my LLC's money hostage, what are my options - vladgur

I opened an LLC couple years ago with 2 other people to do consulting on the side and opened a business checking account with HSBC to go with it. Unfortunately we haven&#x27;t been able to do much work last year due to our otherwise busy schedules and the checking account was largely dormant with 4-figure amount on it.<p>We were planning to close the business at the end of 2013 so that we wouldn&#x27;t have to pay $800 California franchise fee in 2014, but then in late 2013 HSBC closed our account and send us the check in our LLC&#x27;s name. Similar closures happened to HuffPost blogger<p>Thinking that I would just be able to cash the check at HSBC branch, I went there and was told that:<p>* I can&#x27;t cash it there<p>* I have to deposit it in another bank to cash it.<p>* They cannot reissue the check in one of the founders name<p>* They cannot reinstate the account so that I could write out a check in one of the founders names<p>* Another bank would not open an account because LLC is now closed.<p>Our branch visits and calls to HSBC corporate have not come to any satisfactory conclusions.<p>At this point we have a check in the name of LLC that no longer exist, a 4-digit amount held hostage by HSBC bank and no way to get our money back.<p>Any advice would be appreciated.<p>[1]<p>http:&#x2F;&#x2F;www.huffingtonpost.com&#x2F;brett-king&#x2F;when-hsbc-closes-your-ban_b_4362504.html
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redtexture
Revive the LLC, pay the $800. This is cheaper than losing your bank money.

Talk to your California Dept of corporations about how to revive the LLC.

Present the certificate of good standing from the Californis Secretary of
State's corporations division, and then demand the account funds from the
bank.

Alternatively, sign the back of the check over to another payee, and deposit
the check in the payee's account. Endorse as "____ LLC, pay to the order of
_____".

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jason_slack
he should check into this. For example, my bank doesn't accept 3rd party
endorsed checks.

There are check cashing services that may take a chance on doing a 3rd party
check, but they will ding you a pretty penny for it. Usually 10%, IIRC. I
haven't used on of these services in a number of years.

~~~
HeyLaughingBoy
Probably won't work. Banks give individuals a lot of leeway with checks; not
so with businesses.

In fact, my bank makes a point of telling me when they cash a third-party
check without that party present, that they're doing me a favor because I've
had accounts there for so long.

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HeyLaughingBoy
None of this is unusual.

Banks typically will _not_ cash a check made out to a business entity. If you
go to the bank manager with the LLC papers showing you as an officer and your
ID, then she _may_ be able to make an exception but don't count on it.

[edit] I see you apparently already did this. And honestly, going by my past
awful experiences with HSBC, I wouldn't hold out hope anyway.

An alternative would be to open another LLC in a state where it's cheaper
(here it's $50 processing fee IIRC and can be done completely online) and
deposit it into that LLC's bank account.

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codegeek
Why did you close the LLC before taking care of the business bank account in
some way ? Sorry but does not seem like you have a lot of option other than
trying to talk to the secretary of state office of california.

~~~
vladgur
TBH, we had very limited options at that point and did not at all expect that
opening a simple business account at CHASE would take 2.5 months

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ispivak
This [http://wiscc.org/](http://wiscc.org/) shows that small claims has been
used successfully against HSBC before, but it takes over a year and seems like
a hassle.

~~~
dottrap
I think the small claims idea is really interesting. HSBC is probably just
covering their ass with all the stringent business banking regulations. (I
also had a California LLC and the red tape is ludicrous.)

A small claims ruling gives them a way out in that they would have a different
legal loophole to give you your money.

If they realize that you will never be able to cash the LLC check, their books
still balance so they shouldn't care.

Of course, I have no faith HSBC will realize that. I had an account with them,
and it was a miserable experience.

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centdev
Depending on how much your time is worth to you, the $800 may not be a lot to
reinstate the LLC than to waste time and energy trying to get around it.

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icedchai
When trying to reopen the account at another bank, did you actually tell them
the LLC was closed? Or did they figure this out on their own?

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vladgur
We started the process to open a business account in Chase while LLC was still
open, but it took them literally 2.5 months to do it(our documents being lost
after being submitted in the branch) and by the time all the documents were in
place they were able to verify that LLC is now closed.

~~~
HeyLaughingBoy
Is this a Chase thing or a California thing? When I opened my business bank
account at a regional Midwest bank it took all of about 25 minutes from when I
walked in to when I left.

~~~
vladgur
The complication were because its a 3 partner LLC who have full time jobs and
live in different parts of the Bay Area, so Chase suggested we file forms in
the branches closest to us and they will be sent intramail to the same guy who
would then open our account.

Well 2 out of 3 forms submissions went smooth but the last one was lost in the
branch TWICE, all sorts of complications ensued and by the time everything got
resolved, the state of CA posted the CANCELLATION of our LLC online

