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  1. #1
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    Default Taking Money From A Bankrupt Company

    NJ - state (sorry, I posted this in another topic but wasn't sure which one to place it in)...

    My father's business is going bankrupt. He closed the doors about 2 months ago. He declared personal bankruptcy with my mother too. The business will be bankrupt within a month.

    He had my brother cash a $6,000 check for him about 2 weeks before he closed (my brother used to work for him) - so that our parents could have some money to get by for a few months while he was finding work etc.

    My question is...Was that OK with what my father did? Could he get in trouble for it? He has the IRS, wage and labor and a small company on him because he owes money. He believes that he will be paying them back the rest of his life.

    Could my brother get into any trouble for cashing the check for my father? It was a valid check and the funds were available. He didn't know that this could possibly not be legal? He assumed that he was just helping our father out.

    Any advice is appreciated. Thanks!

  2. #2
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    Default Re: Father's Company closed - took money - bankruptcy..

    It sounds like a fraudulent conveyance, which at least in theory the creditors could try to recover from either (or both) your father or your brother. It could potentially cause problems with the bankruptcy. Your father should discuss this with his lawyer.

  3. #3
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    Default Re: Father's Company closed - took money - bankruptcy..

    Quote Quoting Mr. Knowitall
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    It sounds like a fraudulent conveyance, which at least in theory the creditors could try to recover from either (or both) your father or your brother. It could potentially cause problems with the bankruptcy. Your father should discuss this with his lawyer.
    Could you explain more what fraudulent conveyance is?

    And beside causing problems with bankruptcy, what kind of trouble could he or my brother get into? I am worried they would go to jail for something so stupid.

    Thanks again!

  4. #4
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    Default Re: Father's Company closed - took money - bankruptcy..

    Fraudulent Conveyance.

    I doubt that he would face charges. If this is discovered, though, he may be called upon to restore the funds to the bankrupt estate - from his own pocket.

  5. #5
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    Default Re: Father's Company closed - took money - bankruptcy..

    Quote Quoting Mr. Knowitall
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    Fraudulent Conveyance.

    I doubt that he would face charges. If this is discovered, though, he may be called upon to restore the funds to the bankrupt estate - from his own pocket.
    Thank you. My father is being sued like crazy from ex-employees and apparently the IRS or wage and labor was going to go in and investigate his records, but he closed. I may not have my facts straight on that.

    But I was thinking that this could have been "Laundering". Is that not the case I suppose?

    Could my brother get in trouble for this one too?

    Thanks again, that should be all.

  6. #6
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    Default Re: Father's Company closed - took money - bankruptcy..

    If there's money laundering or tax fraud involved, who knows what could happen, particularly if there's evidence that your brother was complicit.

  7. #7
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    Default Re: Taking Money From A Bankrupt Company

    I am so sorry but could you just explain how laundering or tax fraud could be in this scenario?

    Then I promise I wont have any more questions.

    Thanks!

  8. #8
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    Default Re: Taking Money From A Bankrupt Company

    You brought up those possibilities. You know the facts, and we don't.

  9. #9
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    Default Re: Taking Money From A Bankrupt Company

    Quote Quoting Mr. Knowitall
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    You brought up those possibilities. You know the facts, and we don't.
    I understand what you are saying. The only things I know is that he is being sued by two people for wrongful termination (which his lawyer told him that it's a complete joke) - Wage and Labor and the IRS - He has payment plans with the IRS already, but he was backed up on payroll so I believe wage and labor was going to investigate, but then he just closed the company down. (His company relied on government money).

    So from what I know there is nothing being investigated because he shut the company down, just wage and labor and the irs I suppose for the back pay.

    Does that make more sense now? Thanks for your help, I do appreciate it.

    My brother is concerned. My brother wouldn't get in trouble would he? I think he is a bit nervous because he didn't realize it at the time, but now fears he will go to jail over cashing a $6,000 check for our father.

    Thanks again!

  10. #10
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    Default Re: Taking Money From A Bankrupt Company

    Quote Quoting Mr. Knowitall
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    You brought up those possibilities. You know the facts, and we don't.
    Ok and I am sorry, what I meant was what would tax fraud be and what would laundering be? I know a little bit about laundering just from researching.

    Thanks.

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