Gee, thanks for the sympathy.
Jetx...in an effort to get to the heart of the matter, I condensed the story significantly, but, apparently in doing so, may have left out a thing or two. So,...
1. I said "After tap dancing in court for a year trying to collect from major client, his client declares BK leaving us with a uncollectable debt." Here's the details: We, as a computer consulting company and at the urging of one of our employees, decided to help a small LLC composed of computer newbies build and operate a web site for members of their "group"...all 3.6 million of them. The deal was we'd do the technical work...they'd provide the content...we'd do the operation. We'd charge the partnership at cost, and then after our costs were paid, split the profits with them 50-50. After three iterations of the web site...with them NOT providing any content...we negotiated a contract between them and a major ISP to rebrand the ISP's services under the group's name. The partnership was to get $4.95 per month per subscriber. Two days after they signed with the ISP, they canceled our contract...at the urging of the ISP and two of our employees who felt that we were spending too much time on this and not enough on moving the company in a new direction. One of the employees quit, but the other continued working for us and I didn't find out until last month what part he actually played in the whole thing. We did have the foresight to include a clause in contract that said either party could cancel, but if operation was to continue the canceler would have to buy out the other for "fair market value", as determined by an arbitrator. Our lawyers recommended waiting until they had a chance to operate for awhile until we invoked the arbitration clause. We waited a year...their new partner did nothing, they provided no content, so nothing was happening other than our debt mounting. We invoked the arbitration clause. We had to sue them to get them to abide by that clause. They claimed "no income" so our plan was to sue the ISP and the ex-employee for tortious interference by "stealing" our customer...two weeks before our court date, the ISP declared bankruptcy...CoreComm, you heard of them? So...we're out $200,000 with no hope of collecting.
2. Our old company has (its still in business) three types of debt...secured, 941, and unsecured. We have enough money in uncollected receivables to pay all three....however, as I said, $200,000 of that appears to be uncollectable. Another $50,000 is tied up with the Owens Corning bankruptcy...we'll be lucky to see $10,000. That's been dragging on for 4 years now, and no end is in site. That leaves us with enough "collectible" receivables that we could have chosen between paying our employees their last pays, or paying our secured creditors (who carry mortgages on our house). Although it was obvious that our company was insolvent, we did not declare corporate bankruptcy. By NOT BKing the company, we felt we would have better control over how the collectable receivables were spent. Under a BK, the trustee would have paid secured creditors first, and there would have been nothing left for our employees. Had our employees stayed with us, we would have paid them and attempted to work out a deal with the secured creditors. Since our employees resigned, we felt dealing with the secured creditors may have priority. Had they stayed with us as we transitioned into the new company, we would have taken care of their salaries and benefits...I don't see how that "screws" them.
3. The old company is NOT out of business. The departing employees had no right to inform clients that it is. Their employment contracts are still in force. Contracts with existing clients are still in force, and by telling clients that the old company is out of business and taking over servicing them with a new company (which I find they actually formed a year ago) our ex-employees are guilty of tortious interference with our old company. I have some evidence that says that they have actually working to cause the "demise" of our old company under the assumption that would releive them of obligations under their employement contracts.
4. I said, "So, they found an attorney that contacted all old company clients and told them to send any receivables owed to him rather than to us. How can this possibly be legal?" There has been no judgement rendered...it hasn't even been to court...there haven't even been any court papers filed. Their attorney simply sent old company clients a letter saying pay him.
5. "What recourse do we have?"
*** See an attorney. He will LOVE to get into this one.
Yeah, right...if you have money to waive at them.
6. "Obviously, with neither our old company or our new company generating revenue, we have no income."
*** That didn't seem to bother you when you decided to bail on your creditors.... who now have no income to pay THEIR employees!!
I am not trying to excuse this...we screwed up, trusted the wrong people, bet our business on shaky premises and got burned. However, had we BK'd the company, like our two major customers did, our creditors would have been in exactly the same position they're in now. Unsecured and therefore unpaid. Did CoreComm or Owens Corning "defraud" their creditors? I'm not sure I see the real distinction between a BK 11, which screws the unsecured creditors, and a let our old company die, and start a new one.
7. "We have also declared personal BK 7 to protect us from personally guranteed debts of old company. So...any action we take would either be pro se, or on contigency."
*** And with any luck, all of your creditors will realize your likely fraud and contact the trustee with their information.
We listed all our creditors...both personal and business...in our BK filing. They have been informed, and none chose to respond.
8. "What are our chance of finding an attorney willing to take this on?"
*** I would say pretty likely. In fact it founds like your former employees have already found one..... unless you meant to represent you!!
For that, I would say VERY unlikely with your bankruptcy.
Damn, I just love it when the 'screwers' become 'screwees'!!
...RIGHT...thanks for your helpful advice.
