Bankruptcy Law/Hiding money
QUESTION: I worked for a restaurant chain that at one point declared backrupcy to not have to pay their debts and hid money on the side to start a new business to dump their assets into and ended up bigger than ever as a result. Shouldn't there be laws against that? And is there a statute of limitations for proving that they had hid money?
ANSWER: Hi James:
You are right. There are laws dealing with this situation. If the bankrupt was hiding money to avoid paying you, the amount that is owed is considered a priority debt that takes precedence over most other creditors (kind of like some tax debts). However, more than that, it may even be possible for you, as a creditor, to challenge his bankruptcy itself, or at least have the debt declared to be non-dischargeable due to fraud. (That would permit you to go after his present assets that can be traced to the bankruptcy estate.)
Is it too late for you to take this action? Depends on what you knew and when you knew it. This would not necessarily be a problem - however your question does not give enough facts to make that call without knowing more about not only what you recently discovered, but what notice the bankruptcy court gave you, whether you were included as a creditor, etc. I could help you with this but to be sure, I would need to talk to you on the phone so you could know specifically what your options were, how much it would cost, etc. I will not charge you just to talk on the phone - but if you call me I can look up his bankruptcy and we can see what is going on. You can call me anytime at this number. 915 261 3893
Jack Hall, J.D.
---------- FOLLOW-UP ----------
QUESTION: The company didn't owe me money. I was an employee for the company. They were Barrett Bros and declared bankruptcy and started Barrett TB which owns many Taco Bells and KFCs in the northeast. Everyone at the time knew they weren't actually out of money. Management at the time explained that they were being sneaky about it.
My understanding was that you were an employee that had not been paid your full amount of wages when the employer filed for bankruptcy - and that is what would make this debt a priority.
However, depending on the circumstances that you have not yet described fully, whether it was a priority debt or not, you could still request the court to either dismiss the bankruptcy or have the debt to you declared non-dischargeable - which would free you up to attempt to collect from the creditor that has control of the money that was hidden. However, I canít do that unless you call me. 915 261=3893