Collection Techniques Collects Six Figures Even Without Good Paperwork
Two suppliers sold supplies to the same corporate developer. The first supplier obtained a credit application and personal guaranty (Good Paper Creditor). The second obtained nothing (No Paper Creditor). Both allowed the developer to run up significant debts. The developer hit a rough spot and became a mutual debtor. Both suppliers contacted me. After obtaining their consent so that I could represent both creditors, I immediately filed suit on behalf of both creditors in two different courts, based on their respective locations.
In both cases, I sought ex parte attachments on the trustee process which unfortunately caught nothing. Due to the existence of the Good Paper Creditor’s personal guaranty, I was able to seek to attach the individual debtor’s real estate. Unfortunately for the No Paper Creditor, the corporate defendant owned no real estate in its name.
In both cases, the debtor’s counsel immediately contacted me to negotiate a settlement agreement and an agreement for judgment. The corporate and individual guarantor debtor made some of the required payments to the Good Paper Creditor and then defaulted. The corporate debtor made no payments to the No Paper Creditor and thus, true to form, defaulted again on its obligations.
I immediately sent out post-judgment deposition subpoenas to the individual defendant who then identified his accountant and some of his banking information. I then subpoenaed his accountant, his bank and his credit card company so that I could cross-check payments, deposits and reported income. As the depositions kept getting closer and closer to home, the individual defendant folded and I was able to collect almost all of the low to mid five-figure debt owed to the Good Paper Creditor.
Now a lot of attorneys would have given up chasing the now-defunct corporate creditor and told the No Paper Creditor to just write off the debt.
We redoubled our efforts. Checking with the registry of deeds, we identified entities that had lent moneys to the corporate defendant. Everyone knows that you can’t get a loan without an application, so I subpoenaed the lenders to obtain all internal loan documents as well as to get a copy of the checks paid on the mortgage so that I could see if anyone other than the corporate debtor was paying the corporate debtor’s debt. In short, I was looking to see if any other entity was acting as the corporate defendant’s alter ego.
Eureka. Not only did the subpoenaed documents give substantial information about who was paying for whose bill it also uncovered hidden documents showing that the corporate defendant actually held the sole beneficial interest in a realty trust. I immediately filed an ex parte motion pursuant to Rule 69 to enjoin the realty trust from conveying any of its assets as well as prohibiting the corporate debtor from receiving any moneys from the realty trust.
All of a sudden the corporate defendant’s counsel started to offer some money. Initially, the corporate defendant and its principal offered $25K out of a six-figure debt. My client shrewdly decided to roll the dice relying on my intuition. I continued to seek additional bank documents, this time concerning the realty trust, the alter ego corporate entity, the gentlemen who ran the corporate defendant and his wife who not only was the trustee of the realty trust, but had also written numerous of the checks. As the discovery proceeded, the offers increased to 50K and then to 75K. My client held firm. I could smell the green.
Based on the additional discovery, I commenced a suit on the judgment for the No Paper Creditor. This time I named the corporate defendant, the individual defendant and his wife, the realty trust and the corporate alter ego. I sought and obtained an ex-party temporary restraining order.
As a result of my diligence and relentless pursuit of payment for my client, my client received over $115K on a debt on which most other litigators would have given up. Even when your paperwork is not as good as you would like, don’t give up. I never do.
When you choose a commercial collection attorney, choose the attorney that digs deeper and works harder to get you paid. Call Alan M. Cohen at the Law Offices of Alan M. Cohen LLC at 508-620-6900 or email us.