I received payment from debtor on Oct 28, Nov 3 2014 about $43K. Debtor filed bankruptcy on Dec 26, 2014. The debtor mentioned an amount of $19M on the bankruptcy. in what circumstances trust can demand money from me? If So is there a way to protect the money?
In fact the debtor's bankruptcy is completely fraudulent and I know it can be proved.
Any help or suggestions are highly appreciated
Pursuant to 11 USC 547, a trustee can avoid "preferential transfers" -i.e., a transfers of the debtor assets occurring within a specific period of time, generally 90 days. The issue is whether you received a larger amount of money from the debtor than you would have receive if the payments had not been made and the debtor's assets were liquidated. Other factors include the reason for the payment, your relationship with the debtor, the nature and amounts of other unsecured claims, and whether the estate is now insolvent. Please keep in mind, that the trustee must initiate an adversary proceeding against you to recover the funds. If it appears that such a claim is forthcoming, you may have an opportunity to negotiate a deal with the trustee that provides for a turnover of less than the amount you received. At this juncture, you may wish to consult with a bankruptcy attorney. Also, I would suggest you attend the scheduled 341(a) meeting of creditors to see what information is revealed by the debtor.
You may be subject to a preferential transfer action by the trustee. You should immediately hire local counsel to assist you.
One of the important goals of bankruptcy is to equalize the treatment that a debtor gives to creditors. You got paid, and obviously other creditors didn't. That is the principal behind taking money away from creditors who received payment during certain time periods prior to the bankruptcy filing. The idea is that money should shared by creditors who have received more than what they would have been paid in the bankruptcy case. An experienced bankruptcy lawyer will ask you numerous questions about matters not disclosed in your question, and advise if you have anything to worry about.
Go see a good bk lawyer right away.
Maybe. Payment to you may be a preferential transfer under BK law. If a preference, BK trustee can "claw back" the payments to you and possibly distribute to all similarly classed creditors on pro-rata basis.
Maybe. May be possible to protect payments made to you.
May be in your best interests to have the case dismissed.
Review all facts with BK counsel before proceeding.
One of the threshold issues is whether or not the payment was for a pre-existing debt and paid "on acct" or if instead, the payment was for "new product". You need to consult with a Creditors Rights BK atty ASAP. Many of us offer free consultations.
You are not my client and I am not your attorney. This advice is given in the spirit of the AVVO platform and is based on general legal principles. You become a client when you enter into a formal retainer agreement with me.
The payments you have received are both within the preferential period under the bankruptcy code. You need to immediately consult a bankruptcy professional who is well regarded in the community to
1. review to see if these payments are in fact preferential payments;
2. if there are exceptions to these payments (if they are preferential payments);
3. negotiate a settlement; (even if there is a defense because it may still cost less than legal fees);
4. finally, when all else failed defend the action.
Based on my experience with similar cases, there is a huge benefit in taking the initiative and being one of the first few creditors to resolve the matter with the trustee.
We are a bankruptcy firm with office locations in Santa Ana, Alhambra and Riverside.
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