Luxury consignment bankruptcy

[Victimnumber2730]

I consigned two luxury handbags with an online boutique. They sold my bags in November and I received notice from their attorney that they are filing chapter 7 this week. They owe me about $7500. They sold my bag fraudulently bc the bags were sold only a few weeks ago and they knew they were going under at that time. They did this to a large number of other consumers. A few questions:

1. Do I need to file anything with the court?
2. Can I sue the owner personally? Since the business is in chapter 7, I’d like to recoup any funds I can through a fraud lawsuit against the business owner herself.
3. How long will it take to go through bankruptcy court and I find out what, if any repayment I’ll be receiving.

 

[adjusterjack]

Do I need to file anything with the court?

Yes. It's called an adversary action. I got following information off the internet. You may need a lawyer.

http://www.mdb.uscourts.gov/sites/default/files/WITHOUT ATTY - Filing a Complaint.pdf

Can I sue the owner personally? Since the business is in chapter 7, I’d like to recoup any funds I can through a fraud lawsuit against the business owner herself.

It's likely that the bankruptcy is going to be for the individual as well as the business. You'll have to get a copy of the petition. You can file a lawsuit but the bankruptcy will stop the lawsuit in its tracks if the individual is included and the debt to you will be discharged.

How long will it take to go through bankruptcy court and I find out what, if any repayment I’ll be receiving.

How long is anybody's guess. In a Chapter 7 all debts (other than those secured with property) are discharged. As an unsecured creditor you would likely get nothing.

If you are listed as a creditor you should be notified as to the events of the bankruptcy case. Meantime, assuming you are in the US (you haven't said), you can monitor the bankruptcy at:

https://www.pacer.gov/

PS: If you think fraud was involved, contact law enforcement in the city where the business is located.

 

[Taxing Matters]

They sold my bag fraudulently bc the bags were sold only a few weeks ago and they knew they were going under at that time.

That is not fraud. Even if the business is planning bankruptcy, it may continue to do its regular business right up to and even after filing a bankruptcy petition.

1. Do I need to file anything with the court?

You will probably want to file a proof of claim with the court so that you can get your claim in on the assets of the business that the trustee will liquidate if the Chapter 7 is approved.

2. Can I sue the owner personally? Since the business is in chapter 7, I’d like to recoup any funds I can through a fraud lawsuit against the business owner herself.

Probably not successfully. If your contract was with a corporation, LLC, or other limited liability entity then the owners are not liable for the debts of the business unless they personally guarantee those debts. If you could show she personally defrauded you, that would give you something to pursue, but simply the fact that the business sold your bags in the few weeks prior to filing bankruptcy isn't fraud and thus you'd need something more to make a good fraud claim.

3. How long will it take to go through bankruptcy court and I find out what, if any repayment I’ll be receiving.

It'll likely take at least several months. Without knowing the details of the bankruptcy and what the docket is like in the district where the bankruptcy was filed there is no way to make a good guess at this.

 

[despritfreya]

Here is the reality. . .

Until the bk is filed what the debtor’s attny tells you is garbage. You have the right to pursue your claim outside of bankruptcy until a bankruptcy is actually filed.

Whether the entity is filing Chapter 7 (stupid) or the individual is filing a Chapter 7, you are a general unsecured creditor (since the goods are gone). It is highly unlikely that funds will be available for general unsecured creditors. Although, in either case you should file a Proof of Claim. Check the bankruptcy court’s web site for instructions relating to filing a claim once you have the bankruptcy case number.

If the entity is filing Chapter 7 there is really no adversary you can file against it since Section 523(a)(2)(4) or (6) only applies to individuals. You are not going to recover funds that should have been paid to you since those funds are gone. Unfortunately, you are just a creditor like all other creditors.

Since entities do not get discharged in a Chapter 7, once the case is closed you theoretically could sue the entity to attempt to get a judgment but, that judgment will be worthless since the entity is dead.

If the individual is filing Chapter 7 then you could seek to attempt to get your claim held non-dischargeable by filing a timely complaint under 11 USC 523(a)(2) and/or (a)(4) but, to do this, you really should have an attorney and that costs money.

You might want to Google “consignment sales and bankruptcy” to see if there is any information out there that will assist in your understanding.

Des.