What to do if I was a contractor and company I contracted with went out of business owing me a lot of money?

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What to do if I was a contractor and company I contracted with went out of business owing me a lot of money?

The company sold the property where business was located and are going to receive a lump sum payout. Can I still get money they owe me?

Asked on December 11, 2012 under Employment Labor Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You can try suing them for the money. Whether you will recover anything depends on the circumstances. If the company was an LLC or a corporation, you could only sue the company, not any owners. That means that if, by the time your lawsuit occurs, the company has no money or has been dissolved, there is no way to collect. If the company was not an LLC or a corporation, you could sue the owner(s) personally as well.

One possibility is, if you know they are getting money (the lump sum payout) is to sue immediately and seek injunctive relief (a court order) requiring them to either deposit an amount equal to  your pay with the court or in an escrow  account pending resolution of your lawsuit, to make sure there is money available to pay you. You would first seek a temporary restraining order and preliminary injunction, in on the grounds you would suffer irrevocable harm if the money were not deposited or escrowed. Seeking injunctive relief is not easy; you should retain an attorney to help you.


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