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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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This person filed personal bankruptcy not on the business which

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This person filed personal bankruptcy not on the business which is the LLC. I invested money in the business, WE THEN formed an LLC giving me 1/3 of all business, HE NOW HAS FILED HIS PERSONAL BANKRUPTCY NAMING ME AS A CREDITOR! This is why I asked the question regarding my ownership of the BUSINESS/LLC and my right to sell off my interest. He is opening a new business less than 10 miles away in the same name and claims I have no rights to it, I still have a right because of our LLC correct? I was told he assigned the lease which is fraud to me? I have been told my case is too small $70,000. I have a great deal of proof that show him lying on his paperwork but however I have been told the court really doesn't care about such a small case? Upsetting to say the least.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 5 years ago.
HE NOW HAS FILED HIS PERSONAL BANKRUPTCY NAMING ME AS A CREDITOR!

A: The debtor is being careful. You could claim that the debtor's creation of an LLC with you is a fraud (and it may well be), intended to dupe you into providing assets necessary to pay the debtor's creditors in bankruptcy. You would have to sue the debtor in bankruptcy and have the court determine the fraud so that the debtor cannot have any possible claims owed by you discharged. (yes, throwing good money after bad, but if you want to avoid losing your investment and having no recourse against the debtor, then you will have to prove that a fraud has occurred and you are the victim -- you also, may want to contact the county prosecutor, and the U.S. Trustee, because this could be a criminal fraud, and you may be able to avoid having to sue if the government gets involved).

I still have a right because of our LLC correct?

A: Depends on how the operating agreement is written. I think you may have been drawn into a criminal fraud. Contact the county DA/prosecutor and the U.S. Trustee.

I was told he assigned the lease which is fraud to me? I have been told my case is too small $70,000. I have a great deal of proof that show him lying on his paperwork but however I have been told the court really doesn't care about such a small case?

A: Attorneys may not care about a $70,000 case but the bankruptcy court will hear it, if you sue. The issue boils down to how much money do you want to risk to keep the debtor on the hook? Try to get law enforcement involved -- maybe the U.S. Trustee will ask the court to dismiss the bankruptcy entirely, leaving the debtor at your mercy.

Hope this helps.

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