What to do about my employers shifting of assets priorto avoid paying its employees?

I am owed a great deal of money by my employer. The employer, Subsidiary X, is in financial trouble. X’s major asset is its receivables. The parent company is in the process of moving the receivables from Subsidiary X to the parent to shield them from contractors like me, which it owes money to. What recourse do I have if X declares bankruptcy?

Asked on December 2, 2011 under Employment Labor Law, Minnesota


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If you can show that the transfer was fraudulent--that is, that it was effectuated solely for the purpose of defrauding creditors--or that it was preferential--that it treated one party (the parent of X) significantly better than other parties--it may be possible to reverse the transfer and recapture the money. It may also be possible to sue the parent directly, if you can establish that they are the real party in interest in some way (e.g. did you take direction or get projects from them, or from an officer who works for the parent as well as the subsidiary?). Note that neither of these is an easy thing necessarily to do--you should consult with an attorney. More to the point, you should consult with a  lawyer NOW--you may be able to file a lawsuit and immediately seek a temporary restraining order or injunction preventing X from shiftinig its assets to its parent, or requiring X to deposit a sum of money with the court to satisfy any judgment.

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