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  1. #1
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    Mar 2007
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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: Father's Company closed - took money - bankruptcy..

    You were previously told:
    Quote Quoting Mr. Knowitall
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    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.
    I am not sure that your brother can get a better answer without consulting a lawyer.

  8. #8
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    Default Re: Father's Company closed - took money - bankruptcy..

    Quote Quoting aaron
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    You were previously told:

    I am not sure that your brother can get a better answer without consulting a lawyer.
    My brother doesn't want to get involved at all with this. Can he call and have everything be confidential?

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