You would normally want to sue before they file. If they file, you will either have to resolve your claim within the bankruptcy court or bring a motion in the bankruptcy court to allow your claim to continue in the trial court where you filed the lawsuit. We know nothing about the business or its assets, or the viability of your potential fraud action, so we're not in a position to tell you whether or not it makes sense to sue. If you successfully prove fraud, the resulting judgment should be nondischargeable - but it's anything but unusual for a business or individual to suffer a bona fide financial setback that renders them unable to afford a financial commitment that they previously believed they could pay.

