If we are a management company for a real estate development group that owes approximately $10k in fees and the group is heading for bankruptcy, do we have a course of action to collect?

Asked on March 5, 2013 under Bankruptcy Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

You can file a lawsuit, but if they do file bankruptcy, this is the sort of debt that is dischargeable in bankruptcy; the bankruptcy will also put a hold on the lawsuit and any other collections efforts. Depending on the type of bankruptcy, the amount of debt, the value of income and assets, etc., you may eventually get some portion of the money owed you--say, between 10% and one-third, based on my experience--after some number of months or years, after the bankruptcy process works through. If the real estate development group was a non-LLC partnership (that is, it was not an LLC or a corporation), you could try suing the partners personsonally, but you cannot do that with an LLC or corporation--the LLC or corporate form protects the owners from personal liability.

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