Fraudulent Transfer lawsuits are Game Changers
In Texas, Lawyers filing Fraudulent transfer lawsuits can change the game.
An international company based in California obtained a multi million dollar judgment after a two-week trial against an individual who had defaulted on some obligations related to some real estate investment vehicles promoted by the client.
Assistant General Counsel in charge of the case needed lawyers that were experts in post judgment matters and fraudulent transfers. We were retained shortly after the judgment was obtained.
The case was complex and we engaged in significant post judgment discovery. This involved deposing several business associates, former business associates and current employees of the judgment debtor.
In searching the public records related to every family member of the debtor we could find, we eventually discovered that a family member of the judgment debtor who resided in Indiana had formed a corporation in Indiana using the identical name of the corporation utilized by the judgment debtor in Texas.
As the discovery mounted it became clear that the judgment debtor had essentially transferred the business operations to Indiana. There was no one piece of evidence that led to this conclusion. The transactions were a series of puzzles that had to be viewed in conjunction with one another to really understand what was being accomplished by the judgment debtor. The customers of the judgment debtor in Texas really had no idea that anything had changed. Everything looked the same to them.
The discovery initially only demonstrated the company and poor financial health. But that was the Texas version of the company, and it did not engage in any transactions in Indiana.
Eventually we had gathered enough evidence to file a fraudulent transfer lawsuit.We sued the original debtor for the transfer (with the intent of increasing the judgment against him by adding exemplary damages for the fraudulent transfer) and we sued the family member from Indiana, seeking damages suffered because the assets of the business were transferred for no value and hoping for exemplary damages to be assessed against the family member in Indiana.
At that point we began seeking discovery from family members to further investigate the transfer. The breaking point for the defendant came when we begin to zero in on the wife. It was at that point that the offers made to the client to settle the matter became serious.
Over a period of a few months, as the fraudulent transfer matter began to pick up steam and head towards trial, the parties began to negotiate in earnest. Eventually the judgment debtor propose the payout plan that was satisfactory to the client and the matter resolved.
This is another example of the fact that collecting judgments from sophisticated debtors can sometimes be an arduous task and one not suited for most lawyers. A background and experience in these matters will usually be the difference in satisfying the judgment.
We are Texas Lawyers who use Fraudulent Transfer lawsuits to collect debt for our clients.