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Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 5299
Experience:  Extensive experience representing employees and management
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I have a situation where one of my employee worked for a company(X)

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I have a situation where one of my employee worked for a company(X) under contract.
Their client(Y) filed for bankruptcy and the company(X) my employee worked for is not paying me because they did not get paid from the contracting Client(Y) of theirs.
My agreement with company(X) is in Illinois. The contract agreement says that the company(X) will only pay when they get the payment from their client(Y).
Can i Sue this company(X) as they did not file for bankruptcy and are not paying me.

I'm sorry to hear about your situation and hope I can help.

My name isXXXXX am a licensed attorney, and my goal is to provide you with excellent service today.

Unfortunately, it would be very difficult to maintain a traditional breach of contract cause of action against the company due to the contractual provision that states that they will only pay after they receive payment from their client.

However, under the theory of collateral estoppel, you can sue them for the value of the services that they received from your employee, since you did rely upon them paying you when the work was being performed.

They should also be able to put in a bankruptcy claim with the company for the value of the services provided to them, which would offset what they are liable to pay you.

I hope the above information is helpful.

Please let me know if you have any clarifying or follow up questions as I want to ensure that you are completely satisfied with my service. Please contact me first if you are contemplating leaving me a negative rating, as I’ll be happy to continue to address your concerns until you are completely satisfied with my service.

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Thanks and best of luck!

Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 3 years ago.

Thankyou for the answer. I think they said they are waiting on the payment. What are the chances that they get paid if their client filed bankruptcy.

Is it not their responsibility to pay us or will we have to wait uptil they get the payment. And also i heard that they not get one cent for a dollar claim.

Suing is costing me a lot of money.

What do you suggest?

It depends on where they are on the list of creditors for the bankruptcy and how much the assets are, so it's really hard for me to give you anything close to an accurate prediction on that.

I would suggest trying to reach a settlement agreement without suit if you can do so. You definitely should receive something for the work provided under promissory estoppel, but you're correct that filing suit with all the money associated with it may not be worthwhile in this situation.