Results 1 to 5 of 5
  1. #1
    Join Date
    Aug 2018
    Posts
    1

    Default Collecting a Judgment from a Business That May Declare Bankruptcy

    My question involves court procedures for the state of: California

    My wife won a case against a former employer for wrongful termination and was awarded a large amount of money. After the judgment, we are responsible for collecting, which is what we are trying to do. The stage that we are in is we just got an affidavit for a writ of execution, and the writ of execution itself. I understand that a collections firm would be helpful, but they take 30% which is a large amount, so we are trying to collect on their own. We know the corporate address, and have an old paycheck that shows the bank and bank account that they used. We have sent the writ and affidavit to their bank (a well known large multi-national bank,) but I feel we won't get anything out of it at this stage. Our next step will be to go through a process server and subsequently through the US Marshalls for official service and levy.

    Here's the rub: In the trial, the CEO indicated that the company is going bankrupt. So in trying to collect from them, we may run into a situation where this company filed bankruptcy and no longer operates. However, upon doing some research, I found that this CEO now works for a company that sells the exact same product (this company and the former company only sell 1 product,) under a different name, out of a different state, in fact the new company address looks like the CEO's home address. When you call the OLD companies phone number for information, they call back under the NEW companies name. Basically, it seems like the company has just changed their name in order to avoid the sinking ship.

    What do we have to do to collect?

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Collecting from a Former Employer After Default Judgement

    Try to collect your judgment in advance of any bankruptcy. Paying a contingency fee to a collection firm that acts expeditiously to collect the money (if in fact there is money to collect) may prove to be a lot "cheaper" than later recovering only pennies on the dollar (and potentially nothing) in a bankruptcy proceeding.

    If the company files bankruptcy, you are going to need to try to prove that the judgment proceeds are exempt from discharge (if you have a plausible claim to that effect) or fight to try to collect some portion of the judgment from the company's assets. If you hope to prove in bankruptcy court that the business has fraudulently transferred assets in order to frustrate creditors, you will have to see whether the trustee acts on such a claim or if you will have to bring a motion and try to prove in court that certain assets should be recovered for the benefit of creditors. Realistically speaking, to litigate these issues in bankruptcy court you should expect that you will need a lawyer.

  3. #3
    Join Date
    Mar 2013
    Posts
    16,970

    Default Re: Collecting a Judgment from a Business That May Declare Bankruptcy

    Quote Quoting FoxandBear
    View Post

    My wife won a case against a former employer for wrongful termination and was awarded a large amount of money.
    How much?

  4. #4
    Join Date
    Jul 2018
    Posts
    1,433

    Default Re: Collecting a Judgment from a Business That May Declare Bankruptcy

    Quote Quoting FoxandBear
    View Post
    I understand that a collections firm would be helpful, but they take 30% which is a large amount, so we are trying to collect on their own.
    What does "their" refer to in this sentence? Also, there are law firms that handle collection matters that will charge an hourly rate rather than a contingent fee.

    Quote Quoting FoxandBear
    View Post
    We know the corporate address, and have an old paycheck that shows the bank and bank account that they used.
    Who are "they"? Does your wife have a judgment against her former employer and someone else?

    Quote Quoting FoxandBear
    View Post
    We have sent the writ and affidavit to their bank (a well known large multi-national bank,) but I feel we won't get anything out of it at this stage. Our next step will be to go through a process server and subsequently through the US Marshalls for official service and levy.
    There's a lot going on here. For starters, was the judgment entered in state court or federal court? If it was entered in federal court, then the U.S. Marshal will serve as the levying officer. However, if it was entered in state court, the U.S. Marshal wouldn't get involved. The sheriff in the county where the bank is located will be the levying officer. Second, why would you send the affidavit for the writ to the bank? The affidavit is what you submit to the court to get the court to issue the writ, and there's no circumstance under which you should send the affidavit to the bank. Has the court actually issued the writ at this point? Third, you are correct that, if all you've done is sent an unissued writ (or even an issued writ) and an affidavit to the bank, the bank will ignore it. A levy needs to be properly served to be effective.

    Quote Quoting FoxandBear
    View Post
    What do we have to do to collect?
    If she has any smarts, your wife will hire a lawyer to assist her with this. You appear to be way over your head here -- especially if you've got a potential alter ego or successor liability situation.

    P.S. Has your wife perfected her judgment by recording an abstract of judgment with the county recorder and filing a J-1 with the California Secretary of State?

  5. #5
    Join Date
    Oct 2018
    Posts
    12

    Default Re: Collecting a Judgment from a Business That May Declare Bankruptcy

    Also, even if you GOT payment from the company before it filed for bankruptcy remember: the Bankruptcy Code allows a "claw back" for "preference payments" made within 90 days of a bankruptcy filing - a preference payment is a payment "not made in the ordinary course of business." So even if you get paid on your judgment, you're not out of the woods yet.

    1. Sponsored Links
       

Similar Threads

  1. Post-Discharge Issues: Collecting Wages Owed After a Business Bankruptcy
    By Brittany.Davis in forum Bankruptcy Law
    Replies: 3
    Last Post: 03-26-2014, 06:12 AM
  2. Bankruptcy Issues: Filing for Bankruptcy With Tax Liens, Judgment Debts and Business Assets
    By happyheart in forum Bankruptcy Law
    Replies: 8
    Last Post: 10-11-2013, 01:54 AM
  3. Replies: 3
    Last Post: 03-23-2010, 01:12 AM
  4. Chapter 7: Can You Declare Chapter 7 Bankruptcy During Trial
    By bankruptcylaw in forum Bankruptcy Law
    Replies: 1
    Last Post: 08-23-2009, 12:44 PM
  5. Bankruptcy Issues: Ex About To Declare Bankruptcy
    By texone in forum Bankruptcy Law
    Replies: 5
    Last Post: 04-06-2008, 01:27 PM
 
 
Sponsored Links

Legal Help, Information and Resources