Legal Question in Business Law in California

While you can certainly sue them for your $25,000, what you should have done was obtained legal advice up front before you invested. Your question does not contain enough information for me to be able to say whether they would be able to discharge the debt in a bankruptcy. If you had a contract drafted, you could have had the contract say that they would have to pay your attorney fees to collect the debt. In all probability you will have to pay your own attorney fees, so even if you collect $25,000 you won't be made whole. Watch out for legal time limits.

You certainly have the basis for a lawsuit for your damages and losses. If you prove your case and get a judgment, then if they have any substantial assets or income that you can locate at that time, you may be able to collect something on your judgment. That is, if they don't file for bankruptcy first. Then you would have to file a 'claim' in their bankruptcy, and may be able to recover some portion of your judgment, depending upon what assets of theirs the bankruptcy Trustee is able to gather up and apportion out to all the creditors, pro rata. That all assumes you aren't forced into bankruptcy first. If you are serious about pursuing this, feel free to contact me to discuss the fees, costs, risks and facts. It still may be possible to negotiate some kind of repayment to you from them so they can avoid being sued.