Legal Question in Bankruptcy in California

Can a bankrupt business force me to pay back money they paid me

My business is being sued in bankruptcy court for $20,000.00 that the company that filed bankruptcy paid me for product I shipped them at their request. The company owed me about 10,000.00. However, they told me they really needed goods for the Christmas rush so I shipped them $20,000.00 worth the first week of December when they promised to pay me for this shipment right away and pay the other amount later. They paid me for the December shipment on 1/10 of the next year. They filed bankruptcy on 3/28. Can they really force me to pay back what they paid when they got the goods and probably sold it all for a big profit during the Christmas rush. This is a big fat ripoff if they can do this!


Asked on 5/16/02, 12:24 am

1 Answer from Attorneys
Mark Markus Law Office of Mark J. Markus

Re: Can a bankrupt business force me to pay back money they paid me

I'm going to take a leap here and guess that you are not actually being sued by the company you did business with, but by the Trustee in the case (or, if this is a Ch. 11 case, by the Debtor-in-possession). In any event, you are being sued because you were paid within the statutory preference period, not because the debtor set out to rip you off. You may have a defense to the action, such as that the payments were made in the ordinary course of business, or if the payment was made contemporaneous to the shipment. You should contact an attorney in your area for a comprehensive consultation.

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Answered on 5/16/02, 12:39 am


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