Alan secures arbitration victory in corporate creditor dispute
Alan’s client was recently awarded a substantial victory in a dispute concerning the creditors of a local company.
The company was a closely-held firm that was in the business of real estate development. Alan’s client, one of the company’s original shareholders, had to resign from the company for medical reasons, and an agreement was entered into to repurchase the client’s equity interest; this was done through a promissory note that the company never paid.
One of the client’s partners, who ultimately took over the daily operations of the company, claimed that both his mother and former wife had loaned the company tens of thousands of dollars, and that their creditor status took priority over that of the client. Additionally, the partner claimed that his former attorney had loaned the company funds. Alan’s client disputed the validity of these claims. The company was left with little cash, not enough to cover all of the creditor claims and that of Alan’s client.
Alan secured the agreement of the partner’s attorney to submit the disputed creditor claims to arbitration, and the case was arbitrated over the course of three days. The arbitrator ruled that none of the partner’s creditors had valid claims against the company. With respect to the partner’s mother, there were no checks issed or wire transfers that made directly to the company. The former wife’s claims were found by the arbitrator to be invalid because papers filed in the probate court suggested that she and her former husband had resolved all matters relating to his business interests. And the partner’s former attorney’s loan was found to have been made to the partner personally because the loan was booked for accounting purposes by the partner as a personal loan, and because the checks for the loan proceeds were made payable to the partner personally.
In the end Alan’s client was awarded, and recovered, not only all of the funds payable under the equity repurchase agreement, but also was awarded reimbursement for payments he had been forced to make as guarantor of the company credit card.