Legal Question in Business Law in California

We placed a $20k deposit with a company that is now being wound down. I called to have it refunded and learned a division was sold and is running successfully. I see the deposit as an asset. I spoke to their restructuring firm and they are paying secured creditors first, then our group next. He said they have ample funds to pay most, but not all creditors. Isn't a deposit treated differently in that it has to be held aside, toward whatever is the service? I would think the cash deposit would move forward as an asset to go to the new company that bought a division. What I am looking for is your help on how to define the cash deposit? Also, is there an article you can lead me to, for future background? I understand that how we characterize it, as an asset or what we call it, will help us in terms of being considered in line to get reimbursed, because they have choices to pay. They are not in BK. I appreciate any advice you can give. The restructuring firm is being cooperative and is willing to hear from me. Thank you!


Asked on 10/11/10, 5:33 pm

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

Hurry up and sue them before they and their assets vanish or they file BK.

Read more
Answered on 10/16/10, 6:31 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Maybe, but you need a ground upon which to sue........has a contract been breached, or has the prospective defendant repudiated the contract or given you notice (expressly or by implication) that it will breach in the future? Superior Court lawsuits are slow and expensive, even just to prepare and file, so some prudent planning and thought would be advisable. Whether your "deposit" is entitled to any special treatment - priority in a bankruptcy or "trust fund" treatment otherwise - would depend upon the nature of the deal, which you didn't describe; I'd say it is possible you may be entitled to some kind of special treatment, but it is a rather slim possibility. You might want to re-ask your question with more details, or go see a lawyer with some commercial code expertise for a pre-lawsuit consultation.

Read more
Answered on 10/16/10, 9:48 pm
Terry A. Nelson Nelson & Lawless

You either try to protect your rights and claim by obtaining a written agreement doing so, or you sue, quickly. If serious about doing this right, feel free to contact me.

Read more
Answered on 10/18/10, 11:07 am
Aimee Morris

If the deposit was more of a loan or other contractual agreement, perhaps you can get your money right away with a prejudgment writ of attachment and have the Sheriff hold your funds until you are able to obtain a judgment. It sounds as if you may be dealing with a melting ice cream cone; and you need an attorney to protect your deposit.

I cannot stress enough that you should pursue a pre-judgment writ of attachment. Call me right away at 619-991-0548.

Read more
Answered on 10/21/10, 2:09 pm


Related Questions & Answers

More Business Law questions and answers in California