Corporate Bankruptcy Question

mudechevy · **10-28-2009, 4:36 PM**

Dh owns a company. He was a vendor for a home builder. Home builder filed bankruptcy. DH completed work and was paid in full for the work he did. We got a certified letter from Home Builder's attorney as did many other vendors stating that we have to pay that money back. Is this a scare tactic or can they really take us to court and get money from us that we were paid for work completed?

Crue2001 · **10-28-2009, 5:43 PM**

Quote:

Originally Posted by mudechevy

Dh owns a company. He was a vendor for a home builder. Home builder filed bankruptcy. DH completed work and was paid in full for the work he did. We got a certified letter from Home Builder's attorney as did many other vendors stating that we have to pay that money back. Is this a scare tactic or can they really take us to court and get money from us that we were paid for work completed?

It depends on when he was paid for the job. If it was within a certain window of time, the Trustee can & will request the money back.

mudechevy · **10-28-2009, 6:54 PM**

It was from Oct 2007- Jan 2008. REALLY? If he completed work per their contract that they asked him to complete and was paid by them and everything was legal they can just come and get that money back because they cried bankruptcy? I foresee a lot of small businesses going under because of this.

Crue2001 · **10-28-2009, 8:54 PM**

I work for a bankruptcy attorney...I'll ask him for the specifics tomorrow and get back to you as to why. We just had a client go thru the same thing...personal, not corporate, but same thing...Trustee required that the funds paid out be returned. I'll see what I can find out tomorrow.

By the way, when did the home builder's company file for BK? What chapter BK, if you happen to know?

pryan67 · **10-28-2009, 8:55 PM**

it's likely beyond the point at which they can claim preferential payments...

HOWEVER...talk to your attorney...find out for sure....you'd also have to know when they actually filed for BK...

definately speak with your attorney though...

mudechevy · **10-28-2009, 9:05 PM**

It looks like they filed chapter 11 on 1/28/08. They are asking for the pay back from 10/31/07-1/28/08. I guess this is the Preference Period but I have no idea what that means.

This letter says: Under the bankruptcy code, a chapter 11 debtor in possession is empowered to collect all assets of the debtors' bankruptcy estate, including the recovery of monies paid on account of antecedent (pre-existing) debts within 90 days before bankruptcy filing date. Even though these payments may have been perfectly proper when made, bankruptcy code 547 & 550 authorize the debtor in possession to ask the court to order the recipient of such transfers to return them to the debtor...yadayadayada..

I just don't see how they could take money back for work performed under contract. That's unreal.

conj · **10-28-2009, 9:09 PM**

if they get the money back - can you get the supplies back? (I know this wouldn't work on service.... but if your DH installed dry-wall, could he uninstall it?)

mudechevy · **10-28-2009, 9:13 PM**

He's a framer. I don't think the homeowners would appreciate him tearing out their studs. lol Great idea though! So if dh has to give the $$ back, wouldn't the home builder have to give the $$ back to the homeowner that paid them? Just a thought. I know, I know..Only in the movies. lol I'm really trying not to worry about it. It's not like there's much left for them to take. He builds houses...in this economy.

conj · **10-28-2009, 9:16 PM**

you're in luck! the studs would probably survive and be useful as opposed to sheetrock

mudechevy · **10-28-2009, 9:18 PM**

Thanks for making me laugh.

inogenius · **10-28-2009, 9:34 PM**

Was the bill paid a past due bill? If it was, then yes, you will likely have to return the money. However, if it was not a past due bill, then it is considered to be an ordinary part of doing business. The burden is stuck on you to prove that the payment was an ordinary course of business, which I believe would require you to file an adversary preceding to the bankruptcy case.

Unfortunately you're probably going to have to spend some money in some way.

mudechevy · **10-29-2009, 5:45 AM**

Nope, not past due. He was paid timely as work was completed. He was also paid all the way through May or June of this year when they closed their doors.

pryan67 · **10-29-2009, 6:37 AM**

Quote:

Originally Posted by mudechevy

It looks like they filed chapter 11 on 1/28/08. They are asking for the pay back from 10/31/07-1/28/08. I guess this is the Preference Period but I have no idea what that means.

This letter says: Under the bankruptcy code, a chapter 11 debtor in possession is empowered to collect all assets of the debtors' bankruptcy estate, including the recovery of monies paid on account of antecedent (pre-existing) debts within 90 days before bankruptcy filing date. Even though these payments may have been perfectly proper when made, bankruptcy code 547 & 550 authorize the debtor in possession to ask the court to order the recipient of such transfers to return them to the debtor...yadayadayada..

I just don't see how they could take money back for work performed under contract. That's unreal.

imagine how it could go if they COULDN'T recover money like that though

you plan on filing BK...so you stop paying all your bills...and put the money towards a "contract" with a friend of yours...

that's not what happened in your case...however, that's one of the reasons for the law being written the way it is...

definately talk to your attorney and get it settled that way...you don't want to run afoul of the courts...but you should come out of this OK

mudechevy · **10-29-2009, 5:38 PM**

I found this

http://www.law.cornell.edu/uscode/11...7----000-.html

and this http://www.rhdrestructuring.com/faq.php3#Q20
Will vendors be paid for goods and services that they shipped to R.H. Donnelley before its filing?

Unfortunately, our bankruptcy filing means that any payments owed by R.H. Donnelley to a vendor for goods and services provided prior to the filing cannot be paid at this time. These are considered "pre-petition" claims, and vendors seeking payment for such claims must do so through the Chapter 11 process. R.H. Donnelley apologizes for the hardship or inconvenience that this may cause your company.

Which leads me to believe either they CAN do this or they shouldn't have paid us in the 1st place and didn't realize they didn't have to. Either way, I am ready fold up the company and start a new one at the drop of a hat. There is nothing there for them to take except a truck which I might just have to purchase from the company for $1 or $2 if I can get away with it. I just want this year to end.

AndreaInNC · **10-30-2009, 8:50 AM**

so what would happen if you dissolved the company? Can they still try and get their money back from a company that no longer exists?

mudechevy · **10-30-2009, 8:59 AM**

I don't think so. I think that would be our only resort if they did come after it. I just hate the thought of that. He's been in business forever.

This is the thanks you get for working hard folks.

10-28-2009, 4:36 PM	#1
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	Dh owns a company. He was a vendor for a home builder. Home builder filed bankruptcy. DH completed work and was paid in full for the work he did. We got a certified letter from Home Builder's attorney as did many other vendors stating that we have to pay that money back. Is this a scare tactic or can they really take us to court and get money from us that we were paid for work completed? __________________ Barb I sew my own Fancy Pants!

10-28-2009, 6:54 PM	#3
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	It was from Oct 2007- Jan 2008. REALLY? If he completed work per their contract that they asked him to complete and was paid by them and everything was legal they can just come and get that money back because they cried bankruptcy? I foresee a lot of small businesses going under because of this. __________________ Barb I sew my own Fancy Pants!

10-28-2009, 8:54 PM	#4
Crue2001 Member Joined: Oct 2006 Location: Delaware Posts: 1,820	I work for a bankruptcy attorney...I'll ask him for the specifics tomorrow and get back to you as to why. We just had a client go thru the same thing...personal, not corporate, but same thing...Trustee required that the funds paid out be returned. I'll see what I can find out tomorrow. By the way, when did the home builder's company file for BK? What chapter BK, if you happen to know? __________________ Live, Laugh, Love...It's All Good!

10-28-2009, 9:05 PM	#6
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	It looks like they filed chapter 11 on 1/28/08. They are asking for the pay back from 10/31/07-1/28/08. I guess this is the Preference Period but I have no idea what that means. This letter says: Under the bankruptcy code, a chapter 11 debtor in possession is empowered to collect all assets of the debtors' bankruptcy estate, including the recovery of monies paid on account of antecedent (pre-existing) debts within 90 days before bankruptcy filing date. Even though these payments may have been perfectly proper when made, bankruptcy code 547 & 550 authorize the debtor in possession to ask the court to order the recipient of such transfers to return them to the debtor...yadayadayada.. I just don't see how they could take money back for work performed under contract. That's unreal. __________________ Barb I sew my own Fancy Pants!

10-28-2009, 9:09 PM	#7
conj WHats My function, you ask? Joined: Nov 2005 Location: New England Posts: 10,209	if they get the money back - can you get the supplies back? (I know this wouldn't work on service.... but if your DH installed dry-wall, could he uninstall it?) __________________ Don't join dangerous cults: Practice safe sects! Knowledge does not dissolve integrity - Conj

10-28-2009, 8:55 PM	#5
pryan67 Member Joined: Oct 2006 Posts: 1,076	it's likely beyond the point at which they can claim preferential payments... HOWEVER...talk to your attorney...find out for sure....you'd also have to know when they actually filed for BK... definately speak with your attorney though...

10-28-2009, 9:13 PM	#8
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	He's a framer. I don't think the homeowners would appreciate him tearing out their studs. lol Great idea though! So if dh has to give the $$ back, wouldn't the home builder have to give the $$ back to the homeowner that paid them? Just a thought. I know, I know..Only in the movies. lol I'm really trying not to worry about it. It's not like there's much left for them to take. He builds houses...in this economy. __________________ Barb I sew my own Fancy Pants!

10-28-2009, 9:16 PM	#9
conj WHats My function, you ask? Joined: Nov 2005 Location: New England Posts: 10,209	you're in luck! the studs would probably survive and be useful as opposed to sheetrock __________________ Don't join dangerous cults: Practice safe sects! Knowledge does not dissolve integrity - Conj

10-28-2009, 9:18 PM	#10
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	Thanks for making me laugh. __________________ Barb I sew my own Fancy Pants!

10-28-2009, 9:34 PM	#11
inogenius Mail in rebate hater! Joined: Feb 2005 Posts: 3,678	Was the bill paid a past due bill? If it was, then yes, you will likely have to return the money. However, if it was not a past due bill, then it is considered to be an ordinary part of doing business. The burden is stuck on you to prove that the payment was an ordinary course of business, which I believe would require you to file an adversary preceding to the bankruptcy case. Unfortunately you're probably going to have to spend some money in some way.

10-29-2009, 5:45 AM	#12
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	Nope, not past due. He was paid timely as work was completed. He was also paid all the way through May or June of this year when they closed their doors. __________________ Barb I sew my own Fancy Pants!

10-29-2009, 5:38 PM	#14
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	I found this http://www.law.cornell.edu/uscode/11...7----000-.html and this http://www.rhdrestructuring.com/faq.php3#Q20 Will vendors be paid for goods and services that they shipped to R.H. Donnelley before its filing? Unfortunately, our bankruptcy filing means that any payments owed by R.H. Donnelley to a vendor for goods and services provided prior to the filing cannot be paid at this time. These are considered "pre-petition" claims, and vendors seeking payment for such claims must do so through the Chapter 11 process. R.H. Donnelley apologizes for the hardship or inconvenience that this may cause your company. Which leads me to believe either they CAN do this or they shouldn't have paid us in the 1st place and didn't realize they didn't have to. Either way, I am ready fold up the company and start a new one at the drop of a hat. There is nothing there for them to take except a truck which I might just have to purchase from the company for $1 or $2 if I can get away with it. I just want this year to end. __________________ Barb I sew my own Fancy Pants!

10-30-2009, 8:50 AM	#15
AndreaInNC Marching Band Mom! Joined: Nov 2005 Location: Apex NC Posts: 4,185	so what would happen if you dissolved the company? Can they still try and get their money back from a company that no longer exists?

10-30-2009, 8:59 AM	#16
mudechevy D Y K Hijacked again! Joined: Nov 2006 Location: Orlando Posts: 1,196	I don't think so. I think that would be our only resort if they did come after it. I just hate the thought of that. He's been in business forever. This is the thanks you get for working hard folks. __________________ Barb I sew my own Fancy Pants!