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

Answers:

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.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.