Legal Question in Business Law in California

There is not any lien available for bookkeeping services. You are simply an unsecured creditor. The good news is that if the owners sell the corporation and distribute the proceeds to themselves without paying the debts of the corporation, they become personally liable for the debt up to the amount of the distribution.

It depends on how the sale is structured. If they're just selling stock, you can't improve your position, subject to Mr. McCormick's comment.

On the other hand, if they're selling the assets, then you can put in a claim for what you're owed in the escrow that's set up for the asset sale.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

You need to get a lawyer and act immediately, soon, the corporation may not exist and you may have little recourse. You should hire myself or another attorney to demand your money properly from the seller corporation, or buyer, as is appropriate. If you want to send me an email, we could discuss it further.

Best,

Daniel Bakondi

[email protected]

415 450 0424

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There is a limited list of persons (and situations) where a lien arises. This is not one of them.

About the closest you could hope to come would be to sue the corporation and immediately apply to the court for a prejudgment writ of attachment. There are at least three significant obstacles to doing this successfully. First, you would need a basis upon which to sue, e.g., that payment for the bookkeeping services is past due (breach of contract), or that the corporation has informed you that when the bill becomes due it will not be paid (anticipatory breach). Next, after the suit was filed, you'd have to persuade the judge that the corporation was untrustworthy and might try to hide assets, or that there was some other good reason to tie up some of their assets before trial and judgment. Third, you'd have to provide an undertaking (bond) to compensate the defendant corporation, should you ultimately lose the lawsuit.

There is apparently a widespread belief that an ordinary citizen can "file a lien" on a debtor or the debtor's property. This can be done in a few limited instances, e.g., a mechanic's lien by one who provides labor, material or equipment for a work of improvement to real property. There is also a so-called "possessory lien" that says you have to pay the repairman before (for example) you can pick up your repaired watch, automobile, laundry, etc. These are exceptions, created by statute (or the California Constitution), to the general rule that in order to get an involuntary lien you have to go to court and get a judgment.

If it were otherwise, think of the mischief that could be done!