Legal Question in Bankruptcy in Virginia

Company I work for is going to declare bankruptcy (rumor). Management has instructed employees to pull back all of our equipment from all outside entities (companies we owe or will be owing money to) but not tell them anything other than we're doing an equipment refresh. The equipment being pulled back is going to be transferred to a sister company owned by the same investor. Is this legal?

Asked on 2/10/15, 5:00 am

1 Answer from Attorneys

Paul B. Ward Law Offices of Paul B. Ward

A pre-bankruptcy transfer of assets to another entity can be reversed by a trustee in bankruptcy as a fraud on creditors. While you may have to retrieve the equipment as ordered, stay away from the transfer to the sister company and make no false representations to the outside entities. It's a slippery slope.

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Answered on 2/11/15, 9:06 am

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