Oh my god, I don’t know whether to put my fist through a wall or cry.
Here’s the sordid story. If I can get through this without smashing my computer.
I am an officer for a small company. Last January we had a customer file bankruptcy. They stuck us for $70,000 which we had to write off. That was tough but we got through it. Fortunately business was good this year to offset that hit a little bit. The bankrupt company, which is a billion dollar company by the way, sells off its assets and is purhcased by another company that bought several of the branches and is carrying on business as usual, has sent us a letter saying that all the payment they had made to us from October 2003 to January 2004 must be refunded. ARE YOU FUCKING KIDDING ME!!! They state, that according to bancruptcy law they have the right to go back 90 days from the filing date to reclaim their payments. HOW??? They received material, they paid for it, and now they want their money back. They claim if we pay in full by the 1st of December we will only have to pay $115,000. but if we don’t they will sue us for the full $150,000 they paid during those months. FUCK YOU! FUCK YOU! FUCK YOU!
We’ve already written off $70,000 because you can’t fucking manage your company now we have to suffer even more? This will most likely put us out of business if we get stuck paying. PIGFUCKERS!
God, I’m so pissed.
And get this shit, if we pay the $115,000. we may in a year or so get a small percentage of it back. Probably 10% if we get anything at all. But if we don’t pay it and they sue for the 150 large, then, we will not get anything if they settle.
What kind of blackmail nut-twisting maneuvre is that? How can this be legal?
Thanks, big fucking multibillion dollar company, for possibly putting this small family owned company out of business.
Fucksticks. Stick your lawsuit up your fucking ass sideways.
In pit language. That is totally fucked.
I’m sure you have your own lawyers on this, and I hope you can get some alternative resolution other than what you have described.
Good luck.
Yeah, our lawyer is great. I’m trying to think positively about this. What judge would let a company go belly up because another filed bankruptcy?
Thanks for your kind words Kevja.
:eek: :eek: WTF???
This little bit of legal legerdemain in effect punishes the supplier for the failures of the purchaser! How the hell did that ever get passed? I hope you win this battle, because you are so obviously in the right.
Can the exact bankruptcy law that’s about to put you out of business be used to protect you from this type of thing?
The thing is, if we had any idea back in October 2003 that they were going to file in January, we would have stopped selling them. Of course they had been planning it for months from what I hear so they mislead us wouldn’t ya say?
I just don’t get it. They fucked up, not us! Now we will have to lose double the money now.
It’s not right. I udnerstand sometimes companies and individuals need to file bankruptcy but this is out of control. When I had debt problems in my youth I never once imagined trying to screw over my creditors. Damn.
I don’t know, our lawyer and our banker think that playing hardball with them will get them to back off. They’re may be looking for people to shit their pants in fear and pay-up.
I just sent the bastard customer’s file to the lawyer so I’ll have to wait a few days before we come up with a plan of action. He’s got to do some bankruptcy law research.
Since the company technically no longer exists, as their assets were sold, we can’t counter sue apparently. IANAL.
I am a lawyer but not a bankruptcy lawyer, so this is based on the bankruptcy law class I took back in law school in the mid-80s.
The statute I think you are complaining about concerns payments that are called preference payments. The theory is that during the 90 day period before the debtor files for bankruptcy and is presumbably on its way down the tubes, a debtor may prefer to pay one creditor over another and so pay one creditor’s invoice and not another equally justifiable one. The preference law is intended to prevent that, so all creditors get treated the same ( like dirt), so one creditor doesn’t get 100 cents on the dollar and another one $.01. As a result therefore, the bankruptcy court looks with suspicion on all payments made by the debtor within that 90 day period, and makes all the creditors pay the money back so that a tiny portion of it can then be paid out to all the creditors by the bankrupcy court, or its trustee, which manages the bankruptcy estate.
I don’t have any real comfort, but a kind of an explanation FWIW (and I’m guessing that’s not much bc I would be very pissed too).
They are coming after you under the Bankruptcy statues that deal with preferences or preferential payments.
Let’s say you were a creditor of the company, like you were, and when they filed bankruptcy you found out that right before the bankruptcy they paid all the bills owing to just one guy – who happened to be a good buddy of the bankrupt company’s owner, and he was paid in full - while everyone else got -0-
They try to address that situation by saying if the bankrupt was insolvent for some period of time before filing, then they can go back for 3 mos before the filing (1 year for payments made to insiders like owners, officers, etc.) and if one creditor was “preferred” over others, then they can get back that money and re-divide it up in the bankruptcy proceeding.
I don’t know what kind of business you have, but some things to think about in the future are taking security interests in your goods until payment is received, or getting personal guarantees, etc. Secured creditors can usually get by with being paid and people who are being paid “current” (i.e., never let the debtor get behind to start with) are usually ok. But if you are letting them pay off old or accumulated debt, you are at risk.
There are a lot of ifs, ands and buts, so hopefully your lawyer can help you out.
I can understand the law behind it but that really does suck, OP 
Man, when I filed bankruptcy I would have loved to have gotten a rebate like that. Only for businesses, hun?
Make that, “Only for businesses, huh?” I wasn’t using an endearment.
It’d be nice, but the rebate only goes to the other creditors who may not have been paid, by the sounds of it, and not straigt to the bankrupt company.
What sets off my alarm bells here is that any demand for repayment should be coming from the bankruptcy court, not the bankrupt company. Seems to me they’re trying to get around the edges, kind of like Sears reports to credit bureaus that ones account is overdue when it has been relieved in bankruptcy (a tactic Sears is notorious for).
I hope your lawyer finds that this demand is nonsense.
Judging by what zamboniracer and MaryP said, it would seem like any payments that would have to be refunded should be going to other creditors of the now-nonexistent company, and not this other company that bought it. Unless they were also creditors of the original company and got stiffed to a greater degree during those 90 days than Mu’s company did. Something about this story doesn’t ring true to me, but then I’m no lawyer.