Legal Question in Business Law in California

A company that we have done business with in the past filed bankruptcy. We recently received a letter from a law firm representing that company telling us that we were recipients of recoverable funds and if we donít pay it back they will sue us for the amount, which is over $7,000. We are a small company and cannot afford that. In fact, our financial situation is so bad, that $7,000 could potentially put us under.

Of equal concern is, because we have no money to get advice from an attorney, that our company has called their attorney and solicited advice as to what we need to do to avoid being sued. Of course we were told that we had to pay it back, or offer some kind of a settlement. Itís my understanding that we are going offer something as a settlement and send them a settlement agreement drafted by us.

I donít think itís in our best interest to follow the advice of an attorney that represents the company that is trying to get money from us! Do we really have to pay back these ďrecoverable funds?Ē What would we be advised to do by an attorney that doesnít work for the company that is suing us?

Asked on 10/21/13, 2:03 pm

4 Answers from Attorneys

Timothy McCormick Libris Solutions - Dispute Resolution Services

Whether or not you were paid funds that can be "clawed back" into the bankruptcy estate is a matter of very specific details of the transaction(s) and how the Bankruptcy Code applies to them. Without knowing anything about the transaction(s) from your question, and particularly what kind of transactions were involved and the timing of them, there is no way to give you any reliable answer.

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Answered on 10/21/13, 2:17 pm

Edward Hoffman Law Offices of Edward A. Hoffman

Some payments can indeed be "clawed back" by the bankruptcy estate. Some can't. Since we know nothing about these payments or about why the estate believes they can be re-claimed, there's no way we can offer you any guidance. You should consult with a bankruptcy lawyer to find out how strong the claim is, what defenses you might be able to raise, and how you might be able to settle.

Good luck.

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Answered on 10/21/13, 3:16 pm
Kelvin Green The Law Office of Kelvin Green

The cost of sitting down with an attorney now for an hour or so will be cheaper than the seven grand. You are right not to listen to the other side...

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Answered on 10/21/13, 7:14 pm
Anthony Roach Law Office of Anthony A. Roach

It is not clear whether the letter you received is from the Bankruptcy Trustee, or debtor in possession, seeking to avoid a preference, or any other matter. You need to consult with an attorney as soon as possible, as the resolution of your issue depends on both state law and bankruptcy law.

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Answered on 10/22/13, 8:46 am

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