Punitive damages don't happen on a mere contract claim. What is the judgment for (it makes a difference)?
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A judgment the result of fraud, malice and oppression cannot be discharged in bankruptcy -- with the caveat that you will have to file an "adversary complaint" in bankruptcy court, which is like a second lawsuit, to have the court deem the debt nondischargeable. So, that may be an added future expense to try to save your judgment.
If it were me, I would let the judgment issue, because that judgment is entitled to full faith and credit and that will get your bankruptcy claim perfected faster and for less money.
After that, I think that I would ask for the debtor to identify its assets so that I could determine whether there was anything that could be sold to pay some of the debt upfront. Simultaneously, I would want all payments to the debtor made to an account over which I had signing authority, such that I could withdraw a certain percentage of the proceeds from each payment, and leave the rest for the debtor.
That way, there would be no "slow pay."
Whether you can accomplish all this I have no clue. But, as you've surmised, running the debtor out of business is guaranteed to not get you paid.
You can't simply hold off on the judgment.
1. You can enter into a settlement that produces a voluntary dismissal, after which the settlement becomes the enforceable instrument as a substitute contract, but, of course shows no evidence of fraud and can be wiped out in bankruptcy -- so, in my opinion would be a very bad resolution.
2. You can allow the judgment to be made, and then negotiate a separate payment plan while maintaining the judgment as separately enforceable afterwards for the next 10 years, and renewable for another 10.
Considering that you will almost certainly receive a favorable judgment at this point, then unless you believe that the defendant will spend the $20,000+ to appeal the decision, I don' see what you have to gain by negotiating.
I could, of course, be missing something, because I'm not involved in the case enough to know all the knarly details, so that's just my 2 cents.
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