Legal Question in Bankruptcy in Texas

I'm being required to return money to preferred creditors

Hello, and thanks for this service!

I did some contract labor for a company (Company A) in 2001, as a database developer. Company A billed Company B (who the work was performed for) for the work, and I billed Company A.

Company B then filed bankruptcy, Chapter 13 I think. Company B is no longer a going concern.

The bankruptcy court determined that the money that was paid to creditors (including Company A) for the three months prior to the bankruptcy filing date actually belongs to whom the court determined were the ''preferred creditors,'' of whom Company A is not included.

Apparently, Company A had to give money to the receivership, even though Company B still owed a substantial amount of money to Company A! Now, the guy at Company A is telling me that he had to give my name to the bankruptcy court or lawyers, and that I'm going to get a certified letter stating that I too must give to the receivership the money that I was paid during the three months' prior to Company B's filing date.

Does this smell bad? I'm one company removed from the company that filed bankruptcy - should I be liable for part of that money? Should I try to hide all my cash? Would that help?

Thanks again!


Asked on 3/11/02, 4:22 pm

1 Answer from Attorneys
Lawrence Maun Lawrence J. Maun, P.C.

Re: I'm being required to return money to preferred creditors

What Comapny A is being required to return to company B are probably preferential payments made within 90 days of filing a bankruptcy. Company B probably filed a Chapter 11 as a Cahp. 13 is not available to businesses, unless sole proprietorships. Company A has the liability to you. If you did the work for Company A they owe you the money not B. The Trustee of B may be trying to track the money, but will have a very difficult time assessing you. If the work you did was billed to A and they were promptly paid by B it may not be a preference at all as it was paymnet in the normal course of business. Larry Maun 713.266.2560

Read more
Answered on 3/11/02, 6:50 pm


Related Questions & Answers

More Bankruptcy Law questions and answers in Texas