Question:
Kavod Harav,
I am a CPA. A client of mine, an LLC with 5 members, all Jewish, is purchasing a hotel for 2.3MM. In addition, they will be doing renovations that will cost 700K.
The local bank is giving the LLC a loan for 75% of the cost of the hotel and 100% of the renovation.
4 members live in Israel, and one in the US, in the same area as the bank. One of the 4 members is active, and the rest are passive investors.
The bank requires that the 1 US member (Reuven) give a personal guarantee. If C'V things go south and, after repossessing the hotel, there is still a balance due, he will have to pay it.
At the same time, there is an agreement between Reuven and the LLC that the LLC must reimburse him for the money he pays out. This means that the rest of the members must put money into the LLC so that the LLC can then transfer him the money to pay the balance of the loan.
The question is:
Is there a need for a heter iska, since there is no financial connection between the members and Reuven - it is the LLC that must reimburse Reuven - although, on the other hand, the members themselves must come up with the funds?
The matter is quite urgent, so I would appreciate an answer as soon as possible.
Answer:
Hello,
Yes, there should be a heter iska between all of the members. The reason is that if a single member pays the bill, he is essentially giving them a loan by paying their bill, and when they reimburse him for the money, it can be ribis. Even though R' Moshe (Y:D 2-63) allows a corporation to pay ribis, many poskim disagree with this psak, and it is advisable to have a heter iska. Additionally, even R' Moshe doesn't allow the corporation to collect ribis from Jewish customers. If the other partners are going to give ribis to the LLC to give to you, even R' Moshe wouldn't allow it. Therefore, they should all make a heter iska. As a side point, these partners, given their business dealings, should always have a heter iska between them for all of their dealings.
