Legal Question in Business Law in California

Double-Dealing Owner

I worked for a company which went out of business the day before Thanksgiving. At the time of the company's demise, I was owed for three paychecks. The owner had been accused of embezzlement and all his assets, both personal and business had been frozen. One judge reportedly was going to unfreeze enough money to pay us employees what we were due, however, another judge overruled the previous judge and unfroze only part of the account. I've been told that the account now has been unfrozen and am going to go to the bank the company checks are written from on Thursday and cash the check which bounced as the people who held bounced checks were supposed to be given priority over the employees whose checks didn't bounce. I have a meeting with the owner and the labor board next month and was just learned that the owner is possibly paying ''his favorites'' from his other company as that company isn't under his name and thus, hasn't been frozen. I plan to sue the owner if I'm not paid what I'm due. If this rumor is true, that he's paying the employees he likes with money from his other company while telling the rest of his former employees that his assets are frozen, is this legal?


Asked on 12/25/02, 1:04 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Double-Dealing Owner

You have set forth a fairly long set of facts covering several interrelated events, but at each turn of events several new questions arise (in the thoughts of a lawyer) that would need to be answered (or lucky-guessed) in order to give you a useful answer. I would need to know, for example, if either of these businesses is incorporated, what their connection is to each other and to the person you refer to as the 'owner,' and whether the accusation of embezzlement comes from the district attorney or merely from employees or other creditors. I would wonder whether there has been a bankruptcy filing, and if not, whether one is imminent, and if not, why not.

The labor commission hearing should bring out some useful facts and might give you some insights on the applicable law.

If you do have a case above and beyond the labor-law violations, it may come under the laws against fraudulent transfers. It is also possible you and other creditors might get some benefits from forcing the debtor into an involuntary bankruptcy.

However, before anyone could give you a truly helpful answer, you would have to sit down in a face-to-face conference with a local lawyer. I suggest you consider doing this, if you can get someone to give you a free initial consultation.

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Answered on 12/26/02, 12:50 pm


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