Legal Question in Business Law in California

Re: $30000 help

I pretty much agree with the two prior answers, except I think there is an additional line of recourse against a business entity (LLC or corporation) that folds up without paying of arranging to pay its creditors....if the previous operator went out of business by selling the business or its assets, the seller (or buyer) would be liable to trade creditors such as yourself under the Bulk Sales Act, Commercial Code section 6101 et seq. If on the other hand, the prior owner merely folded the corporate/LLC business and took its assets and used them to start another business, that would be a fraudulent distribution in liquidation of the business entity and any insider (owner, director, officer) participating in a distribution ahead of creditors is liable to the creditors.

So, under one or the other of these two laws or legal concepts you ought to have a cause of action against the owner personally.

Re: $30000 help

If I understand correctly, you are owed more than 25K. I would contact an attorney for an estimate on fees so you can better evaluate the cost/benefit analysis. There are several ways to get at your money if it is still in his hands, even if it has magically mutated into something else. LLC or not, you can sue the man individually and may get a personal judgment against him (based upon what you have said about the way he operates). You could also get a judgment against the LLC then attach any money that you can trace going out of the LLC into something else.

Again, however, although there are many legal actions you COULD pursue, the question facing you is what you SHOULD do. That question is one that should be answered after a discussion with an attorney.

Regards,

TJR

I do not accept clients from this message board nor do I make referrals to other attorneys based upon postings I have made here.

Re: $30000 help

Learning some realities of business and finance: if the contract was with a LLC, it is that LLC responsible, not the individuals involved, not unless there were special circumstances. You could sue the company and subpeona corporate records to see IF there are any grounds to go after the people involved through 'piercing the corporate veil', which MIGHT be done if there was a failure to properly handle the corporation business and finances, amounting to fraud. You'd pay the attorney fees and costs necessary to sue, and still might [probably] find no basis to go after the individuals. Then, even if you could sue the individuals, do they have substantial assets and income to collect from IF you get a judgment or settlement?

If, after all that, you seriously intend to pursue this, feel free to contact me for the legal help you'll need, or at least advise based upon the full facts.