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On Sun, 21 Nov 2004 02:43:12 GMT, wrote:

On Sat, 20 Nov 2004 16:26:11 -0500, GregP
wrote:

You're right about the fighting back, but your lawyer
may swallow up a hefty percentage of what you are
trying to protect. Also, at least one article that I read
claimed that in many bankruptcies the Chapter 11
lawyers do do this on a recovery basis, but maybe
it was wrong.

On Sat, 20 Nov 2004 20:10:23 GMT, wrote:

This is done to prevent (or at least mitigate) blatant fraud by the
bankrupt in the form of transferring assets out of the company into
friendly hands to protect them. Like a lot of things about bankruptcy
it is a two-edged sword.

Which is bull, of course,

Not bull, but very likely an abuse of the law.

since a small-scale businessman
who provided goods and services and was paid for them
is hardly practicing "blatant fraud." On the other hand,
it gives some additional money back to the primary creditors,
who almost always happen to be banks or others well-
connected,

Not if you fight back. And you don't have to fight very hard. Once
again, you're dealing with a negotiating situation, not a
hard-and-fast legal determination. (Okay, there's a hard-and-fast
legal situation buried in the mddile of the mess, but as a practical
matter it comes down to negotiation.)

and it's a great source of revenue for the bankruptcy
attorneys, since they usually collect a third of anything they can
scare or bully people into coughing up

Not in these cases. The attorneys in bankruptcies work on a fee basis,
not a recovery basis. (The exceptions are the bottom feeders who are
essentially collection agencies with a law degree.) Privately, lawyers
refer to the issues involving small amounts of money like this $10K as
'junk' and they wish feverently they would just go away. They would
much rather put their time and billable hours into something that's
going to get their clients vastly more money, such as weaseling
another couple of points on the recovery percentages or screwing the
other big creditors.

these people being,
of course, the little guys who can't afford the fancy attorneys
to fight back.

Actually it doesn't cost all that much for the simple reason that the
creditors' committee can't afford to spend much money pursuing the
little guys. As I say, a good stiff letter from a bankruptcy attorney
letting the creditors know they are in for a fight if they try to
pursue this will usually make them go away.

In order to collect that 'preferential transfer' the creditors have
got to convince the judge (ultimately) that it was in fact
preferential. The law may favor them, but it is not a slam dunk and it
will take time and money to press the issue. For $10 K or so, the
lawyers can't afford it. Especially not since they are consumed with
the much bigger fish they have to fry in a large corporate bankruptcy.

Unless you roll over and don't fight it, or try to get by with a TV-ad
law firm, the chances that they will actually get that money back are
pretty slim and everyone knows it.

That means all you are out is time, worry, attorney's fees, etc. Not a
good situation, but not the disaster you seem to think it is.

--RC
Sleep? Isn't that a totally inadequate substitute for caffine?

On Sun, 21 Nov 2004 00:26:18 -0500, GregP
wrote:

On Sun, 21 Nov 2004 02:43:12 GMT, wrote:

On Sat, 20 Nov 2004 16:26:11 -0500, GregP
wrote:

You're right about the fighting back, but your lawyer
may swallow up a hefty percentage of what you are
trying to protect. Also, at least one article that I read
claimed that in many bankruptcies the Chapter 11
lawyers do do this on a recovery basis, but maybe
it was wrong.

Some very low end bankruptcy lawyers will operate on a percentage
basis, but basically they're bill collectors with a law degree.
They're not going to be representing large clients unless perhaps the
grownups have farmed the junk out to them. In that case the same
reasoning would apply in spades. They're bottom feeders and they're
not going to give you a fight.

One of the problems with operating on a percentage basis in a Chapter
11 is figuring out what constitutes 'recovery' and how you're going to
get paid. In a business 11 the 'assets' are likely to be somewhat
nebulous. What did the attorney actually recover and what was already
in the estate, for instance. Then there's the fact that a business 11
involving a corporation usually involves very little cash. Lawyers
don't like to take stock and such in lieu of cash. They prefer a firm
claim against the estate for X amount of dollars.

On Sat, 20 Nov 2004 20:10:23 GMT, wrote:

This is done to prevent (or at least mitigate) blatant fraud by the
bankrupt in the form of transferring assets out of the company into
friendly hands to protect them. Like a lot of things about bankruptcy
it is a two-edged sword.

Which is bull, of course,

Not bull, but very likely an abuse of the law.

since a small-scale businessman
who provided goods and services and was paid for them
is hardly practicing "blatant fraud." On the other hand,
it gives some additional money back to the primary creditors,
who almost always happen to be banks or others well-
connected,

Not if you fight back. And you don't have to fight very hard. Once
again, you're dealing with a negotiating situation, not a
hard-and-fast legal determination. (Okay, there's a hard-and-fast
legal situation buried in the mddile of the mess, but as a practical
matter it comes down to negotiation.)

and it's a great source of revenue for the bankruptcy
attorneys, since they usually collect a third of anything they can
scare or bully people into coughing up

Not in these cases. The attorneys in bankruptcies work on a fee basis,
not a recovery basis. (The exceptions are the bottom feeders who are
essentially collection agencies with a law degree.) Privately, lawyers
refer to the issues involving small amounts of money like this $10K as
'junk' and they wish feverently they would just go away. They would
much rather put their time and billable hours into something that's
going to get their clients vastly more money, such as weaseling
another couple of points on the recovery percentages or screwing the
other big creditors.

these people being,
of course, the little guys who can't afford the fancy attorneys
to fight back.

Actually it doesn't cost all that much for the simple reason that the
creditors' committee can't afford to spend much money pursuing the
little guys. As I say, a good stiff letter from a bankruptcy attorney
letting the creditors know they are in for a fight if they try to
pursue this will usually make them go away.

In order to collect that 'preferential transfer' the creditors have
got to convince the judge (ultimately) that it was in fact
preferential. The law may favor them, but it is not a slam dunk and it
will take time and money to press the issue. For $10 K or so, the
lawyers can't afford it. Especially not since they are consumed with
the much bigger fish they have to fry in a large corporate bankruptcy.

Unless you roll over and don't fight it, or try to get by with a TV-ad
law firm, the chances that they will actually get that money back are
pretty slim and everyone knows it.

That means all you are out is time, worry, attorney's fees, etc. Not a
good situation, but not the disaster you seem to think it is.

--RC
Sleep? Isn't that a totally inadequate substitute for caffine?

Sleep? Isn't that a totally inadequate substitute for caffine?

On Sun, 21 Nov 2004 06:02:30 GMT, wrote:

Then there's the fact that a business 11
involving a corporation usually involves very little cash. Lawyers
don't like to take stock and such in lieu of cash. They prefer a firm
claim against the estate for X amount of dollars.

That was precisely the rational given for lawyers going
after the folks who had been already paid and receiving
a percentage of the recovery.

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