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Fri 14 May, 2004 09:18 pm
I financed the startup of a small natural health corporation in 1997; my partner operated it in Tennessee. Long story short: We had differences and parted ways in 1998 with a verbal agreement regarding compensation for my original investment, which was roughly $100,000.00 and led to a personal bancruptcy for myself (discharged in 1998). Due to illness, I have been unable, until now, to more aggressively pursue this issue of reimbursement and have learned that the business is doing well and also that my name still remains on various corporate documents listing myself as president and CEO. How am I liable and can I recoup any of my loss?
Your liability should be limited by the fact of being incorporated, unless someone can show extreme negligence or criminal acts.
I think it was Sam Goldyn of MGM who said "An oral contract isn't worth the paper it is written on." Verbal, of course, could be either oral or written.
Get thee to a lawyer. You need to retain an attorney and give him or her all available information.
Bankruptcy Estate
My memory is not fresh on this issue, but I believe when you filed your bankruptcy action, your partner's verbal agreement to pay you $100,000 for your investment in the business should have been listed as a bankruptcy asset. Maybe you did list it?
When you file bankruptcy, all your nonexempt property and property interests belong to the bankruptcy estate. The bankruptcy trustee is required to manage the estate for the benefit of your creditors. Certainly, if the trustee knew that your former partner owed you $100,000, the trustee more likely than not would have attempted to collect the money for the bankruptcy estate and the benefit of creditors.
If you now attempt to sue your former partner for the money, he may have an affirmative defense if you failed to list the debt owed to you as an asset in your bankruptcy petition. Your former partner's verbal agreement to pay you $100,000 might be totally unenforceable in a court of law under the circumstances.
Consult with your attorney on this issue!
more thoughts....
Two more points that you ought to discuss with your attorney:
1. The statute of limitations may have expired--your claim may be stale and unenforceable depending on your state statute of limitations on contract claims.
2. Even if you could collect the money, if you didn't declare it as an asset on your bankruptcy schedules, your former creditors might discover that fact and petition the bankruptcy court to reopen your case and set aside your discharge....many thorny issues here!
Be careful where your tread; consult an attorney!
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