I am involved in a dispute with a company whose services I recently retained. When they failed to deliver, I sued them for breach of contract. As far as I know, this LLC has only one member and I seem to be their only client (it's a fairly new business). When the LLC does in fact declare bankruptcy, do I have any other way of getting the money which I have already paid back??
Advice would be appreciated!
Intellectual Property Law Attorney
You should keep in mind that a lot of people claim that they are going to file for bankruptcy when faced with a lawsuit, but never actually do so. The reasons can be many, but ofttimes they simply discover that they will lose assets that they are not willing to lose or can't escape liability through bankruptcy. This is particularly true if you can find a way to legitimately name the owner of the business instead of just the LLC itself as a defendant in your lawsuit. Furthermore, if you can legitimately allege a claim for fraud, such a claim may well survive a bankruptcy. If the amount you lost is substantial, it would definitely be worth your time to consult with an attorney to see if you can legitimately amend your complaint to name the owner or to allege a claim for fraud.
Even if the business does actually file for bankruptcy, the type of bankruptcy protection they seek (generally Chapter 7 or 11 for a business and Chapter 7 or 13 for individuals) will affect what happens to your claim. Chapters 11 and 13 are "reorganizations" that are supposed to result in payments to creditors over time, though the amount of the payments can sometimes be very low. Again, probably worthwhile to seek the advice of an attorney on your options for asserting a claim in the bankruptcy and your chances of recovery.
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I agree with the attorney before me on all points. However, since the business is fairly small (one person), your main focus should be on how to collect the money from the business through negotiation first. If that does not work, try suing in small claims court which is faster that regular court. Once you have a judgment against the LLC, you can collect on the judgment through traditional collection means.
If the LLC declares bankruptcy, which I agree is unlikely as the attorney above points out, then you will have priority as a creditor with a judgment in hand. Take the steps above and make sure to keep close watch on how the business owner proceeds to make sure he or she does not hide assets from you as this will affect your ability to collect on the judgment.
Legal disclaimer: The above information is not legal advice and should not be relied upon as legal advice. No representations are made in the above communication nor may any information contained herein be used in a court of law as a representation upon which you may rely.