Don't know if proper forum but has become a factor in Rural Living.
Was notified a year ago that a small company I had invested in went into bankruptcy and chose Chapter 7 instead of 13.
Since I hadn't had (36 sheets of paper signed like a bank does) It is indicated that there will be no funds to return.
Has anyone won or been involved in this type of Legal Theft.
Had a lawyer until the bankruptcy notice and he backed out . Suggested a another lawyer that said to late to get involved
Is a Fed. bankruptcy judge this big that lawyers will not challenge his decisions.
Not wanting names or legal advise just how did you come out.
ken
When you say "invested in," do you mean you bought equity, e.g., stock or a limited partnership interest? If so, equity holders are at the end of the line, behind creditors. You would have been given the opportunity by the bankruptcy court, with a deadline, to file a "proof of interest," but it would be rare in the extreme for there to be enough assets to make any distribution to interest holders.
If you mean you made a loan to the company, then you were either a secured creditor (e.g., the bank probably had some form of collateral and would be secured to the extent of its value, unsecured for any deficiencey), or just an unsecured lender along with other unsecured lenders, trade creditors, tort claimants, etc. The debtor is required to schedule all known debt, and if yours was listed on the schedules, you would have been entitled to whatever distribution,
if any, the creditors in the same class received (unless the Trustee in Bankruptcy objected to your claim and won). If you were not listed, or were listed but were not satisfied with the amount scheduled, you were entitled to file a "proof of claim" by a specific deadline. You should have received notice from the court of that deadline. In a Ch. 7, the court appoints a Trustee in Bankruptcy to gather the assets, evaluate the merit of claims, and to make distributions in accordance with statutory requirements.
The bankruptcy judge oversees the process and adjudicates disputes, including the merits of any claims that are objected to, but it is the Bankruptcy Code that determines who gets what, and the Trustee who liquidates the assets and makes the distributions. It is certainly technically possible to establish a claim without written proof, but it is tough for obvious reasons. Presumably the lawyer you had before the Ch. 7 filing advised you on the merit of your pre-bankruptcy claim, and what would be necessary to prove it. If you had enough proof before the filing, then you had enough proof afterwards. The way you'd have to go about asserting it is what changed.
Can't tell from your post, but from your last sentence it sounds like your claim (or interest, if equity) might have been adjudicated by the bankruptcy judge, and a decision made to deny it. If so, there was an appeals process available. Lawyers challenge bankruptcy judge decisions very often, if they see a legal basis for doing it. In many cases, though, it would mean throwing good money after bad.
