Legal Question in Business Law in California

Re: Fraud Representing Collateral in Business Loan

Let's just say, you've been getting some interesting and entertaining advice. There is a default judgment against you, and you haven't been told unequivocally to set that aside?? If you don't properly defend this suit there WILL be a judgment against you 'personally'. If it is for fraud, which is possible as you were CEO, that is probably not dischargeable in BK. You could lose everything you've got. Feel free to contact me if you get serious about protecting yourself.

Re: Fraud Representing Collateral in Business Loan

The key here is your guaranty; that would seem to make you personally liable to the creditor whether or not you committed a negligent misrepresentation and are sued for that.

It is not sufficiently clear how many suits are involved here, nor the current status, charges or named defendants of each. This makes it difficult to give you much of an answer. However, if I were you, I'd assume that the plaintiff is dangerously likely to get a judgment for somewhere around $2.5 million against you personally, in one or another suit, under one or another theory or theories, whether misrepresentation or personal guaranty, and that a comprehensive and well-reasoned plan of legal defense is necessary.

In any event, you need personal legal representation by someone you trust to dig in to the facts of your situaion and give you advice you trust. This is far too big and too factually complex for you to rely upon either a BBS answer or an attorney whose advice you question.

Re: Fraud Representing Collateral in Business Loan

Never allow a fraud judgment to go unchallenged prior to filing for bankruptcy. If you do, it will probably not be dischargeable in bankruptcy. If you are begin sued personally, a bankruptcy would stop the lawsuit and establish a short time deadline for the creditor to sue you in bankruptcy court.

You should contract an experienced bankruptcy attorney right away. Visit the website for the National Association of Consumer Bankruptcy Attorneys and find a local attorney to assist you.

Re: Fraud Representing Collateral in Business Loan

As others have pointed out, this is a complicated matter with much at stake. I would not let the first action go to default without answering, especially if they named you individually. If you would like to review the matter with me, i would be happy to advise further. We are currently handling corporate fraud matters and our office represents clients in litigation matters on a fixed fee, cost certain basis. Feel free to contact me at your convenience.

Yours truly,

Bryan

619.400.4929

Re: Fraud Representing Collateral in Business Loan

There are a number of comments in your post that are confusing. First, you mention that they filed against the corporation but it is unclear if the original lawsuit was against you. You then indicate that there was a default filed based on a failure to respond to the lawsuit. There is a limited time during which you can set aside a default if you have good reasons and so you're on a clock here. It appears that the default is against you personally and may be based on the personal guarantee? I think part of what the bky atty is trying to tell you is that filing a Ch.7 personally puts into place an "automatic stay" that would stop progression of the default into a judgment for a short time so that you can retain counsel and figure this out. Without knowing more, I can't agree/disagree with this strategy as bky is undesirable if there are other strategies, you can't file on a dime as easily under the new laws that require prior credit counseling, and you may not be able to do it quickly enough to stop the judgment. If the judgment requires a "prove up" hearing, you may be able to check the court's docket (list of case events) and get a clear idea of how much time you have to get this figured out. What is evident is that you were unable to explain the problem clearly enough for any of the responding attorneys to give you clear comments and so you probably don't have the skills necessary to figure this out yourself. Moreover, fraud judgments are one of the few things other than taxes that survive a bankruptcy filing and so you don't want to mess around with it. The cost of an attorney for you personally is far outweighed by the risks of an adverse outcome! I would strongly recommend that you find local counsel to give you a clear recommendation and peace of mind.