Legal

Ask a lawyer and get answers to your legal questions

Ask a Lawyer,
Get an Answer ASAP!

Business Foreclosure with unpaid employee wages, payroll…

Customer Question
Business Foreclosure with unpaid...

Business Foreclosure with unpaid employee wages, payroll taxes, etc...it seems that the lender in first lien position comes ahead of the employee wages in liquidation, but I also hear that employee wage law suits can come after anybody and everybody they may name in the suit, including managers, payroll clerks, owners, shareholders, etc....notwithstanding foreclosure proceedings. I am an employee/manager, and I am unclear what my legal exposure is here in the after math of this business foreclosure.

Lawyer's Assistant: Since laws vary from place to place, what state is this in? And has any paperwork been filed?

I live in NC, but the business had locations in 5 states and employees in a few more than that.

Lawyer's Assistant: Has anything been filed or reported?

There is a foreclosure agreement between the company and the first lien position lender. I am not sure what else should or has been filed. To my knowledge, this has not been filed as a bankruptcy.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

What details could I share that would help match me to a lawyer that is a good fit for this kind of scenario?

Submitted: 4 months ago.Category: Legal
Show More
Show Less
Ask Your Own Legal Question
Answered in 23 hours by:
3/14/2018
Lawyer: Michelle-mod, Moderator replied 4 months ago
Michelle-mod
Michelle-mod, Moderator
Category: Legal
Satisfied Customers: 12
Experience: Moderator
Verified
Hello:
I'm Michelle, the moderator for this category. I'm so sorry that an Expert has not connected with you yet. I wanted to reach out to see if you still needed assistance with your question? Please use the reply box below to let me know if you'd like to continue or cancel.
Thank you!
Michelle~Moderator
Ask Your Own Legal Question
Customer reply replied 4 months ago
I would love some feedback still.
Lawyer: Legal Eagle, Lawyer replied 4 months ago
Legal Eagle
Legal Eagle, Lawyer
Category: Legal
Satisfied Customers: 13,319
Experience: Licensed to practice before state and federal court
Verified

Hello! I am a licensed attorney, admitted to practice in state and federal court. I have a nearly 100% satisfaction rating (click here for more info) so all that means is that you can count on me to help today. Because I want to provide you with the most accurate answer possible, do you mind if I take a moment to review your question?

Please keep in mind that our conversation does not include an attorney-client relationship and this is for general information purposes only.

Ask Your Own Legal Question
Lawyer: Legal Eagle, Lawyer replied 4 months ago

Thanks very much for your patience. Did you have any ownership stake in the organization? Also, were you denied any wages at all?

Ask Your Own Legal Question
Customer reply replied 4 months ago
I do have unrecieved wages. I do have an ownership position.
Lawyer: Legal Eagle, Lawyer replied 4 months ago

I see what you mean. Ok, so when you mentioned that the business was foreclosed upon, could you describe that more for me? Usually, foreclosures are only appropriate when a lender is foreclosing on some lien they have against personal property or real property, not against a business itself. Did you mean that the business just dissolved?

Ask Your Own Legal Question
Customer reply replied 4 months ago
There was a foreclosure agreement between the company and the 1st position lien holder. The position is secured by all assets and A/R.
Customer reply replied 4 months ago
The agreement stipulated that when management determined the business was no longer a viable going concern, the foreclosure agreement would come out of escrow and go into affect.
Customer reply replied 4 months ago
What management did not anticipate was upon foreclosure the foreclosing lender took a position to not pay payroll taxes and even some pay two employees for the final pay.
Lawyer: Legal Eagle, Lawyer replied 4 months ago

I see what you mean. Thank you for clarifying. So, to answer your question, employees are entitled to pay for all hours that they have worked regardless of the position of the company. A lien holder has the right to the assets of the company if it is dissolved and liquidated. These two issues are separate. The business is still responsible for making sure that you get paid, but the lien holder is the one that will be able to recover the money from any assets that are sold of the company. Whoever is still running the business must still ensure that payroll is met even if their assets are being sold.

In your case, as a part owner of the company, it is likely that you are responsible for making sure payroll is met, but you will also have to ensure that the lien holder gets their share of the money. The trouble is that employees like yourself could go to the department of labor and still hold the organization accountable for making the payroll requests. The company's failure to do so could result in additional fines and penalties they would have to pay.

What other questions did you have for me today that I can help you out with:-)?

Ask Your Own Legal Question
Customer reply replied 4 months ago
Should we allow that scenario to play out, we fear IRS would seek recoupment of payroll taxes from the officers or even owners long after the foreclosure company has liquidated assets and has moved on. In some wage law scenarios I have heard claims can even be made against any named party including managers, payroll clerks, etc.
Lawyer: Legal Eagle, Lawyer replied 4 months ago

I understand your concern. Generally, if the IRS or your state taxing agency gets involved, they're only going to be concerned with getting money from the company itself. Unless the government can prove that the owners acted in a fraudulent or intentional manner to defraud the employees or taxing agencies, it is unlikely anyone would be held personally liable, including managers or payroll clerks. Owners of the company might be held liable; however, employees are not going to be held liable because they're just agents. The only exception would be if the agents acted fraudulently or intentionally themselves. Does that make sense?

Ask Your Own Legal Question
Customer reply replied 4 months ago
The laws seem mutually exclusive and conflicting. 1st lien holders come ahead of employees in liquidation, but law dictates that employees must be paid. If there is not enough money for both, then one if the two parties is short paid.
Customer reply replied 4 months ago
The Lender will fight for creditor rides with no concern for employee rights. The company owners want to fight for employee rights and limit their personal liabilities, but have a little leverage over the lender.
Lawyer: Legal Eagle, Lawyer replied 4 months ago

I can totally understand your concern with this. The law does seem conflicting. Lien holders and employees seem to share equal footing. I think that what's important is that you and the other owners speak with the lien holders about this and come to an agreement. The reason is because the government has authority and if they seize assets to help make payroll, the lien holders will have to beg a judge to let them get paid. If the lien holders are smart, they'll use that money to pay the obligations first and then take the rest.

What other questions did you have for me today that I can help you out with:-)?

Ask Your Own Legal Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a lawyerLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Legal Eagle Your Own Question
Legal Eagle
Legal Eagle
Legal Eagle, Lawyer
Category: Legal
Satisfied Customers: 13,319
13,319 Satisfied Customers
Experience: Licensed to practice before state and federal court

Legal Eagle is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Not only did he answer my Michigan divorce question but was also able to help me out with it, too. I have since won my legal case on this matter and thank you so much for it.

LeeMichigan

< Previous | Next >

Meet the Experts:

Ely

Ely

Counselor at Law

24,657 satisfied customers

Private practice with focus on family, criminal, PI, consumer protection, and business consultation.

INFOLAWYER

INFOLAWYER

Attorney

22,408 satisfied customers

Licensed attorney helping individuals and businesses

JPEsq

JPEsq

Attorney

2,132 satisfied customers

Experience as general attorney, in house counsel, SSDI, Family Law attorney, and law professor

Law Educator, Esq.

Law Educator, Esq.

Attorney

44,066 satisfied customers

JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law

Ellen

Ellen

Lawyer, Consultant

8,238 satisfied customers

25 years of experience helping people like you.

Guillermo Senmartin

Guillermo Senmartin

Lawyer

300 satisfied customers

Principal Attorney at Guillermo J. Senmartin, P.A.

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

17,183 satisfied customers

Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.

< Previous | Next >

Related Legal Questions
The consult is in regard to unpaid wages and vacation time.
The consult is in regard to unpaid wages and vacation time. All wages (even unpaid) were reported to the IRS. I was employed from 9/2003 thru 3/2014. Owner currently has her facility up for sale. I be… read more
Law Educator, Esq.
Law Educator, Esq.
Attorney
Doctoral Degree
44,066 satisfied customers
In a foreclosure in North Carolina, if there is an existing
In a foreclosure in North Carolina, if there is an existing lien, how is it considered: must it be settled first?… read more
Ray
Ray
Lawyer
Doctoral Degree
33,318 satisfied customers
I am a Power of Attorney for an Investor in a Restaurant,
I am a Power of Attorney for an Investor in a Restaurant , the restaurant is made up of 2 class A members and about 20 Class B members , Class A members hold 65 percent of the business split evenly be… read more
Law Educator, Esq.
Law Educator, Esq.
Attorney
Doctoral Degree
44,066 satisfied customers
I own a house - IN CALIFORNIA, I RESIDE IN TENN- and borrowed
I own a house - IN CALIFORNIA, I RESIDE IN TENN- and borrowed a home equity on about 10 years ago. The home has since devalued and I want 2 walk away from it. I have real estate assets in other states… read more
Roger
Roger
Litigation Attorney
Doctoral Degree
26,935 satisfied customers
M employer bounces my paycheck for weeks at a time. What can
M employer bounces my paycheck for weeks at a time. What can I do to avoid this? My bank charges fees, my monies gets mixed up with trying to cover for monies I earned.… read more
CalAttorney2
CalAttorney2
Attorney
Doctoral Degree
8,845 satisfied customers
I have found that I can no longer afford my home and have had
I have found that I can no longer afford my home and have had to move from the state of NC for employment. Since I am no longer making payments, what is the process and the reprecussions?… read more
Roger
Roger
Litigation Attorney
Doctoral Degree
26,935 satisfied customers
If a person fails to pay a creditor, in some cases the creditor
If a person fails to pay a creditor, in some cases the creditor may get payment by: (Points: 5) Garnishing that person wages Foreclosing on the property Destroying that property All of the above a and… read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers
New York State Department of Labor, coming after me for wages
New York State Department of Labor, coming after me for wages even though we have LLC which could not pay employees because the investor was a scam. I thought the whole purpose of having an LLC is to … read more
FLACORPLAWYER
FLACORPLAWYER
Doctoral Degree
1,750 satisfied customers
I have a commercial loan for my RV Mobile Park business in
I have a commercial loan for my RV Mobile Park business in Reno Nevada. I was personally guaranteed for this loan so the loan is actually under my name. The trust deed of this RV Mobile Home Park was … read more
Ray
Ray
Lawyer
Doctoral Degree
33,318 satisfied customers
Question regarding foreclosure or short sale. HB 3004 says
Question regarding foreclosure or short sale. HB 3004 says the following: 2009 SESSION House Bill 3004 RSS FEED FOR THIS BILL RELATING TO SALES OF FORECLOSED PROPERTY; AND DECLARING AN EMERGENCY. Prov… read more
Ray
Ray
Lawyer
Doctoral Degree
33,318 satisfied customers
I am a co signer along with another person on a business line
I am a co signer along with another person on a business line of credit. the building was also on the loan as collateral. the business has closed. what is the order of collection. will they go after t… read more
Barrister
Barrister
Attorney/Landlord/Realtor
Doctoral Degree
37,820 satisfied customers
I am a GC in Florida. Last week the investor on an ongoing
I am a GC in Florida. Last week the investor on an ongoing project stopped all payments to my company. He took over paying everyone including my employees. He released two men and wrote payroll checks… read more
Ellen
Ellen
Lawyer, Consultant
Doctoral Degree
8,238 satisfied customers
If you worked for a nonprofit and they owe you money how can
If you worked for a nonprofit and they owe you money how can they refuse to pay you after you have been promised to be paid? How can they change you from a paid employee to a volunteer worker to avoid… read more
JBaxLaw
JBaxLaw
Attorney
Doctoral Degree
8,080 satisfied customers
Hi! I am 50% partner in a business loan secured by real estate.
Hi! I am 50% partner in a business loan secured by real estate. My partner has defaulted and I can not keep paying the full amount anymore. All my other credit is perfect. The business loan is in the … read more
Barrister
Barrister
Attorney/Landlord/Realtor
Doctoral Degree
37,820 satisfied customers
what are the foreclosure laws in the state of Washington.
what are the foreclosure laws in the state of Washington. I have a house that I tried to short sale the first approval relieved me of the debt the buyers could not close on time we were issued a 2 nd … read more
LawTalk
LawTalk
Attorney at Law
Juris Doctor
128 satisfied customers
I have a home that is totally upside down, i lost my job, it
I have a home that is totally upside down, i lost my job, it is an adjustable high rate loan and i have not made payments since may 08. i received a notice it was going to foreclosure then an arbitrat… read more
jbrlaw
jbrlaw
Doctoral Degree
132 satisfied customers
I have (had) a condo in NC that unfortunately is heading ...
I have (had) a condo in NC that unfortunately is heading toward foreclosure. I don't live in the condo, I reside in WV. I am not opposing the foreclosure. The homeowner's association fees were (are) $… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
what would happen if i got a new house and i let the lender ...
what would happen if i got a new house and i let the lender take the old house back. could they come after my new hosue… read more
LegalEagle, LLC
LegalEagle, LLC
Attorney at Law
Juris Doctorate
982 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x