Legal Question in Bankruptcy in California

I sold my business to my CPA. (which is 90% proprietary techniques) We financed it for her for a 10 year period. Before the first payment came due, they defaulted because they thought we had a certain client. After a couple of days of discussions, they realized they had misunderstood, they asked for a new contract with an extended term, and a smaller payment. So we re wrote the contract. They then made the next 2 monthly payments. (That would be February and march payments) they then defaulted again stating they didn't know we didn't have that client. So we have filed a breach of contract against them. They then went and filed bankrupcy to try and get out of this, but they are still running the business. We have filed to get the debt they owe us non dischargable, but our attorney is not real knowledgable with bankruptcies. The defendants keep saying they didn't know we didn't have that account, but remember, they resigned the second contract. Also, she was our CPA and knew everything about our company, including our financial status and our clients. Also, this business is all proprietary techniques. No matter what, you can't take that knowledge away from them. We have all the proof in the world to show they defrauded us. We have every email, contracts (both the first one and the second one) and proof she had our financial records just days before the signed the contract. We also have the intent to purchase letter from them stating they had done all of their du diligence. Well, they got the bankrupcy approved 2 weeks ago, but our part is still in the court system awaiting the next step. Last week, we found out the spent $10,000 on a vacation to Disney land and to the virgin islands for them and their 3 kids. Her annual income is a million dollars. How can they file bankrupcy? Please tell me where we stand on this. Is it something we should continue pursuing? Or should we drop it?


Asked on 1/16/12, 9:21 am

1 Answer from Attorneys
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

What does this mean: "We have filed to get the debt they owe us nondischargeable." Your attorney should have filed an Adversary Complaint to have the debt declared nondischargeable within the legal time limit after they filed bankruptcy. Unless this was done correctly, you are stuck out of luck. If you hired an attorney to do this, and the attorney didn't do it correctly, you could have a lawsuit against the attorney. There is also a legal time limit for filing legal malpractice lawsuits. If you send me the bankruptcy case number I will look it up for you.

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Answered on 1/16/12, 10:32 am


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