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Question about CHAPTER 7 Bankruptcy and continuing to do business

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DRandini

Junior Member
What is the name of your state (only U.S. law)? California

Hello!

I am suing a car dealership in California for Title Fraud, and last month my attorney informed me that the dealership has filed for Chapter 7.

My question is, are they still allowed to remain open for business while they are in this type of bankruptcy?

It seems that they are now operating under a different (but similar) name, and different phone number, at the same exact physical address. I was under the impression that if they entered Chapter 7 they had to "close their doors" and simply liquidate their lot in order to pay their debts. Is it legal for them to still operate while they are waiting for their bankruptcy hearing?

Thanks!
David
 


Zigner

Senior Member, Non-Attorney
What is the name of your state (only U.S. law)? California

Hello!

I am suing a car dealership in California for Title Fraud, and last month my attorney informed me that the dealership has filed for Chapter 7.

My question is, are they still allowed to remain open for business while they are in this type of bankruptcy?

It seems that they are now operating under a different (but similar) name, and different phone number, at the same exact physical address. I was under the impression that if they entered Chapter 7 they had to "close their doors" and simply liquidate their lot in order to pay their debts. Is it legal for them to still operate while they are waiting for their bankruptcy hearing?

Thanks!
David
Sounds to me like that dealership isn't operating any longer and a new dealership has taken over. It's a pretty common tactic to use...shady, but legal and common.
 

DRandini

Junior Member
Ok, but just out of curiosity, what if it turns out that the inventory they are selling is the same inventory that the "old dealership" was supposed to be selling off?
 

FlyingRon

Senior Member
Ok, but just out of curiosity, what if it turns out that the inventory they are selling is the same inventory that the "old dealership" was supposed to be selling off?
If you're talking new cars, the cards are almost always floor planned, that is financed by the manufacturer. This is a secured debt which means the cars were likely "repo'd" by the manufacturer who then turned them over to the new dealer.
 

DRandini

Junior Member
Actually this place sells only used cars, and fairly cheap ones at that (sorry, I should have mentioned this up front)
 

LdiJ

Senior Member
Actually this place sells only used cars, and fairly cheap ones at that (sorry, I should have mentioned this up front)
Its still quite common and likely legal. The new company buys out the assets of the old company(without buying the debts) for what the inventory is ACTUALLY worth, which is normally pennies on the dollar, and then the old company files for bankruptcy.
 

DRandini

Junior Member
What kind of title fraud are you suing them for?
As far as I know it's just Automobile Title Fraud. I paid cash for the vehicle, and since it didn't have plates I asked if the title would come in the mail from the DMV with the plates (i was a jackass i know) and it never did. I should have realized that I needed to get the title from them right then and there.

The big warning sign a couple months into it was when i was pulled over and the cop said that the owner/registration showed up as being a dealership other than the one that I bought the car from.
 

DRandini

Junior Member
Lifting the Automatic Stay: possible or no?

Thanks for the replies!

I have one more question about this:

The dealership filed for Chapter 7 in mid-June, and the trial was originally set for early September.


Is there any reason my attorney shouldn't file a request to lift the automatic stay (or file an adversary proceeding), seeing that this is a FRAUD CASE?
Shouldn't the case be able to move forward sooner rather than later?
 

Zigner

Senior Member, Non-Attorney
Thanks for the replies!

I have one more question about this:

The dealership filed for Chapter 7 in mid-June, and the trial was originally set for early September.


Is there any reason my attorney shouldn't file a request to lift the automatic stay (or file an adversary proceeding), seeing that this is a FRAUD CASE?
Shouldn't the case be able to move forward sooner rather than later?
What did your attorney say when you asked this question?
What makes you think this is actually title fraud, as opposed to clerical errors at a failing business?
 

DRandini

Junior Member
I have one of the best firms in the state that took this case in April of last year and it has already been filed as a fraud case.

I paid in cash when I bought the car and they never gave me the title, and this particular car dealership didn't even rightfully own the car when they sold it to me according to the DMV (it shows up under a different dealership). I was never able to register the vehicle and still can't.

My personal attorney at the firm went on vacation for an entire month and will be back in a few days and I am just trying to learn as much as i can!
 

DRandini

Junior Member
The dealership's attorney also tried to compel arbitration (even though I waived my rights to sue in the contract) but the judge denied them this.
 

Zigner

Senior Member, Non-Attorney
I have one of the best firms in the state that took this case in April of last year and it has already been filed as a fraud case.

I paid in cash when I bought the car and they never gave me the title, and this particular car dealership didn't even rightfully own the car when they sold it to me according to the DMV (it shows up under a different dealership). I was never able to register the vehicle and still can't.

My personal attorney at the firm went on vacation for an entire month and will be back in a few days and I am just trying to learn as much as i can!
Please ask your attorney when he returns. S/he knows all of the facts of the case.
 

Zigner

Senior Member, Non-Attorney
I know I'm responding to an older thread, but I was remiss in not pointing out a certain fact for the OP that was probably important. Here in California, one does not receive the title to a vehicle from a dealership when they buy a car there. The OP really didn't have a reason to expect to receive a title from the dealership. The dealership processes the paperwork and the DMV sends the title out along with the license plates, if needed (just as he was told.)
 

quincy

Senior Member
I know I'm responding to an older thread, but I was remiss in not pointing out a certain fact for the OP that was probably important. Here in California, one does not receive the title to a vehicle from a dealership when they buy a car there. The OP really didn't have a reason to expect to receive a title from the dealership. The dealership processes the paperwork and the DMV sends the title out along with the license plates, if needed (just as he was told.)
This was an older thread revived by a poster who has been reported in the past for spam - which is why the thread was sent back to the archives.
 

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