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Asked 8 months ago - Arcadia, CA
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A small start-up company sold me some stocks three years ago. The company is run by group of two people (husband and wife) - who serve as only officer of company. They used their home address as company address. Turned out they skimmed investors' money to buy personal things. In 2011, they apparently picked up and fled overseas (they are dual citizens in Asia and US). The company still exists and uses their nephew's home as business address.
I filed lawsuit in state court and sent service of summons and complaint to last known home address and company's existing address. The husband and wife didn't appear, instead filing bankruptcy for company in federal court, trying to stay the case in state court. Did I file sufficient service or should I fight it out in bankruptcy court?
As my colleague has indicated, the filing of a bankruptcy effects a stay. If you do anything to attempt to further your state court lawsuit, you will violate the stay with very bad consequences. You need to immediately consult with a bankruptcy attorney who is familiar with creditor's rights. That attorney can tell you the effect of a BK filing on the right to collect from the individuals under various theories, as well as what is involved in proceeding through the bankruptcy court to get your money (if any is left).
Move quickly because there are filings that need to be made in the BK proceeding to protect your rights in that venue.
Good luck to you.
The issue of whether there was sufficient service may not be relevant because 11 U.S.C. ยง 362 is a Federal statute that provides for an automatic stay of state court proceedings involving a debtor with a pending petition in the U.S. Bankruptcy Court. If your lawsuit is against the company that declared bankruptcy, then you need to start thinking about how the bankruptcy affects your claim. Bankruptcy law is a highly specialized practice, and you should consult with a bankruptcy attorney to help you.
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