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  1. #1
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    Default Suing a Business Partner to Recover Money Loaned to the Business

    My question involves bankruptcy in the state of: Pennsylvania

    I owned a small percentage of a business for 9 years with a partner who forced me out recently. I took out a home equity loan to invest originally and it was never paid off. It is in my name but the business used all of it and I can prove it. After I was forced out, the business went under and my former partner is claiming bankruptcy-Personal and Corporate. We were an LLC, but for the last year it was open we changed to an S Corp. I have been in litigation with him for over 2 years. Is there any way to get my debt paid off??

  2. #2
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    You borrowed money and either loaned it to or invested it in a business in which you were a principal, that has now failed. If you made a loan and the business has assets, you may be able to make a claim against those assets (in competition with other creditors) for the balance of the loan. If you invested in your own business, you are not entitled to special compensation above and beyond the value of your shares merely because the business failed.

  3. #3
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    But I feel like if I wasn't forced out it would have remained open. At the time I was forced out, the company was profitable. It failed 1 1/2 years later.

  4. #4
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    Quote Quoting Beauty501
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    But I feel like if I wasn't forced out it would have remained open. At the time I was forced out, the company was profitable. It failed 1 1/2 years later.
    Your feelings and a couple of bucks will get you a cup of coffee.

    Should we infer that this was an investment, and not a loan?

  5. #5
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    It was $95,000.00. And it was a loan.

  6. #6
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    Then you line up with other creditors, and see what (if anything) you can recover from the business.

    Perhaps you can leverage your position to assume control of the business and start managing it in a way that you believe will result in success and profit.

  7. #7
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    Quote Quoting Beauty501
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    It was $95,000.00. And it was a loan.
    You say it was a loan but can you prove it?

    Any paperwork, loan contract, etc?

    You say you've been in litigation for two years. What does your lawyer say about all this?

  8. #8
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    Yes I have all documentation to prove it. My lawyer can't seem to get him into discovery because of the stay in bankruptcy or something along those lines. He was court ordered to pay some of my attorney fees because he was wasting the courts time and not listening to the ruling, then the judge turned around and said he can't rule on that in civil court so we are back to square one. My lawyer has filed every motion in the book. Nothing. Not a penny and no results thus far. No one will even let us deposition him.

    The business is closed.

    Quote Quoting Mr. Knowitall
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    Then you line up with other creditors, and see what (if anything) you can recover from the business.

    Perhaps you can leverage your position to assume control of the business and start managing it in a way that you believe will result in success and profit.
    It is closed now.

  9. #9
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    Quote Quoting Beauty501
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    My lawyer can't seem to get him into discovery because of the stay in bankruptcy or something along those lines.
    If you really want to spend $$ on discovery relating to the financial affairs of the Debtor(s) might I suggest talking to your attorney about a Rule 2004 exam?

    Des.

  10. #10
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    Default Re: Suing a Business Partner to Recover Money Loaned to the Business

    Quote Quoting Beauty501
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    Yes I have all documentation to prove it. My lawyer can't seem to get him into discovery because of the stay in bankruptcy or something along those lines. He was court ordered to pay some of my attorney fees because he was wasting the courts time and not listening to the ruling, then the judge turned around and said he can't rule on that in civil court so we are back to square one. My lawyer has filed every motion in the book. Nothing. Not a penny and no results thus far. No one will even let us deposition him.
    As long as the bankruptcy has been filed and is in progress the automatic stay prevents anybody from doing anything else.

    There may be things you can do through the bankruptcy court to move things along but if your lawyer isn't well versed in bankruptcy law you should be getting a bankruptcy lawyer.

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