Can I take over a business if I am their largest creditor?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Can I take over a business if I am their largest creditor?
I own a consulting company. I was retained to guide the business from a money losing enterprise into a profitable one. Slowly that has happened. As part of my hiring contract, I was to be paid a monthly retainer. Since the company’s cash flow is always tight, they’ve missed many payments. The overdue payments now total over $150,000. They do not have the cash to pay me, although they are minimally profitable every month. They are talking about paying me $2,000/month. I am afraid they will go belly up before I get paid. If I force them to pay me now, they will fold. Are their other options?
Asked on July 7, 2011 under Business Law, Pennsylvania
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Legally, your only option is to sue them for the money they owe you, unless and only to the extent that your contract or other agreement with them provided a different recourse. (e.g. if the agreement gave your security in property or accoutns receivable, or the right to take control of the business, you may enforce those provisions.)
Of course, if you do sue (or even threaten to sue) nothing stops you and them from working something out--for example, they could agree to make you an officer of the company, to give you an ownership interest or profit participation, etc. So if you do sue to enforce your rights, you and the company may come to any settlement, including you taking over the business, that you mutually agree to.
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.