Customer Selling, Owes Us Money

[Manhappy]

Hello. A customer (a business) owes my company ~40k. They ran out of funds, went into debt, and are now selling the company. They have a buyer and are currently going through the sale process. This is a home health agency, and I think the main, and possibly only pieces being sold are the Medicare license and insurance contracts. Is there anywhere I can step in and do something to increase my chances of collecting the funds?

 

[Zigner]

What US State?

Your company will need to review whatever contract they had with the customer. Your company will likely need to consult with (and retain) an attorney to pursue this matter.

I do, however, have a prediction: Your company will not see a dime from the deadbeat customer.

 

[quincy]

Hello. A customer (a business) owes my company ~40k. They ran out of funds, went into debt, and are now selling the company. They have a buyer and are currently going through the sale process. This is a home health agency, and I think the main, and possibly only pieces being sold are the Medicare license and insurance contracts. Is there anywhere I can step in and do something to increase my chances of collecting the funds?

Please clarify: Do you have a judgment against this customer/business?

 

[adjusterjack]

If you don't already have a judgment or a lawsuit in progress you'll need to file one ASAP and ask the court to place the debtor under receivership.

What Does It Mean When a Company Is Forced Into Receivership? (azcentral.com)

But even that is an extremely long shot. You may incur large attorney fees and still not get any money out of it.

How did you manage to let the debt run up to $40,000?

 

[Manhappy]

Thanks for the responses! This is in California. I do not have a judgement against them.

The 40k was 80k at one point. They were on a payment plan for a while. Part of it is just the nature of our industry, part of it was us just making mistakes as new business owners, getting excited, and not having a solid foundation to protect ourselves (this was from a few years ago).

 

[adjusterjack]

You didn't happen to get a personal guarantee from the owners of that business?

 

[Manhappy]

No, unfortunately not.

 

[Zigner]

No, unfortunately not.

What kind of business are they?
What kind of business are you?

(Corp, LLC, Sole Proprietor, etc.)

 

[zddoodah]

A customer (a business) owes my company ~40k. They ran out of funds, went into debt, and are now selling the company.

You seem to be drawing a distinction between the "customer," "they" and "the company." I'm guessing what you meant to say is that your (former) customer, a business entity of some sort, owes your company money and that the owner(s) of the company are selling the company. Is that right? If so, what is the business entity form of the customer? Corporation? LLC? Something else? What is the reason for the debt (i.e., why goods/services did your company provide to the customer)? How old is the debt?

I think the main, and possibly only pieces being sold are the Medicare license and insurance contracts.

Well...that's different from "selling the company." Do you actually know the nature of the transaction that is in the works?

Is there anywhere I can step in and do something to increase my chances of collecting the funds?

Maybe. Answer the questions asked (and identify your and the customer's state(s) of business), and I or others can point you in the right direction.

 

[Manhappy]

Thanks!!

My company is and LLC, the customer is a corporation. They are a home health agency, my company is a team of therapists that they contract with to treat their patients. We charge them for each visit our therapists complete. The debt is 2 years old.

I don't have enough access to be 100% certain what the nature of the transactions. Basing my assumption on a few calls with an employee of the customer who is assisting with the sale.

 

[adjusterjack]

File a lawsuit. Get the court to issue an injunction to stop the sale of the business. Have the business audited.

My guess is that the license and insurance contract (and probably client list) is worth what the seller owes you.

Do nothing, get nothing.

 

[zddoodah]

My company is and LLC, the customer is a corporation. They are a home health agency, my company is a team of therapists that they contract with to treat their patients. We charge them for each visit our therapists complete. The debt is 2 years old.

I don't have enough access to be 100% certain what the nature of the transactions. Basing my assumption on a few calls with an employee of the customer who is assisting with the sale.

So...a corporation that owes your LLC money is selling something to someone (or the owners of that corporation are selling their shares).

Without anything more than that, there's nothing more that your LLC can do other than file suit against the corporate debtor. You could seek a right to attach order, which, if granted, would allow your LLC to tie up the corporation's assets pending entry of judgment. Depending on the details of what you know, your LLC might be able to get the order on an expedited basis, so you will want to discuss that with the attorney that your LLC hires.

 

[quincy]

Thanks!!

My company is and LLC, the customer is a corporation. They are a home health agency, my company is a team of therapists that they contract with to treat their patients. We charge them for each visit our therapists complete. The debt is 2 years old.

I don't have enough access to be 100% certain what the nature of the transactions. Basing my assumption on a few calls with an employee of the customer who is assisting with the sale.

It sounds like it is time for you to consult with an attorney in your area if you hope to recover what is owed.