Today, I got a Summons to pay back the severance payment I received
from a company when I was terminated. The company declared Chapter 11
within 90 days after my termination. The law firm representing the
company has sent me an offical summons stating that I must pay back
the severance payment. They are saying that it is a "fraudulent transfer",
was not necessary, and that the company did not receive any value in
return. Therefore, I, as a Debitor, must pay back the money. We are
talking about $5600.00.

Previously, I received a unoffical letter from the
same law-firm. The letter asked to return the money and said
that I could pay 80% of the total and be done with the matter.
I responded with details about the money being "severance" and
that fair consideration was given. Also, I detailed that
the company still owed me additional money as per the termination
agreement.

Hiring a lawyer is too expensive for me. Plus it would be have to
be a lawyer in the companies home state of Colorado (I reside on
the east coast.)

What options do I have? Any suggestions are much appreciated.

Thanks,
Bruce

I am not a lawyer. But it sounds to me like a law firm is being dishonest
(it happens on rare occasions) and is trying to trick or intimidate you
into returning the money.
Hiring a lawyer is too expensive for me. Plus it would be have to be a lawyer in the companies home state of Colorado (I reside on the east coast.) [...]

You really *do* need a lawyer to answer your questions. In many areas,
lawyers will give 1/2 an hour or so of free consultation. Phone around.

BWeimer wrote: Today, I got a Summons to pay back the severance payment I received from a company when I was terminated. The company declared Chapter 11 within 90 days after my termination. The law firm representing the company has sent me an offical summons stating that I must pay back the severance payment. They are saying that it is a "fraudulent transfer", was not necessary, and that the company did not receive any value in return. Therefore, I, as a Debitor, must pay back the money. We are talking about $5600.00. [...]

When someone declares bankruptcy, there's a provision to take back funds
or assets paid out in the previous 90 days. It's to prevent fraud where,
for example, before I declare bankruptcy, I "sell" my daughter the company
truck for $15. This is obviously a fraudulent transaction designed to
deprive creditors of the asset in favour of a relative.

Unless there's something beyond your simple relationship as an employee, I
don't see how this could be construed as a fraudulent attempt to misdirect
company assets. But many lawyers will try anything on for size.

I don't know if this legal provision requires "them" (see below) to assert
or prove that the transaction was fraudulent, or if they can exercise
their own discretion, but the allegations in their letter make me suspect
that they need to assert that the transaction was suspect, if not actually
fraudulent (otherwise they wouldn't mention it).

How soon after your termination did you get the payment? How soon after
the payment did they declare bankruptcy? Is there anything between you
and the employer outside of your employment relationship?

Contact the appropriate labour board. Often, labour legislation provides
that employee wages are considered outside normal debts and bankruptcy
considerations, or that wages are at least given first consideration.

Some questions that occur to this layman:
Previously, I received a unoffical letter from the same law-firm. The letter asked to return the money and said that I could pay 80% of the total and be done with the matter. [...]

If you are somehow legally bound to return this money, it strikes me as
odd that they're willing to "settle" for 80% on the first letter.

Again, I'm no lawyer, but I understand a bankruptcy to be handled by a
trustee -- a third party -- *not* the company's own lawyer. Shouldn't the
creditors or a bankruptcy trustee be asking you to return this money?

Are you sure it's "the law firm representing the company" as you said?
(Again, I wouldn't be surprised as some lawyers will try anything.) Are
they implying, then, that their own client has acted in a fraudulent
manner?

What's the difference between the unofficial letter and the official
"Summons". Presumably the summons is backed up by a court. You should be
able to phone that court to get an idea of whether this summons has any
weight, or is just a piece of paper on lawyer's letterhead with the word
"Summons" on it in capital letters.
I responded with details about the money being "severance" and that fair consideration was given. Also, I detailed that the company still owed me additional money as per the termination agreement. [...]

How much do they still owe you? If you get yourself a lawyer, perhaps
they can remind them that if you are not on the list of creditors when the
bankruptcy is discharged, their debt to you will still remain.
Hiring a lawyer is too expensive for me. Plus it would be have to be a lawyer in the companies home state of Colorado (I reside on the east coast.) [...]

You really *do* need a lawyer to answer your questions. In many areas,
lawyers will give 1/2 an hour or so of free consultation. Phone around.

--
Willondon

I got a request for more details to my original posting below.
Here they are! Thanks for asking!

The details.. about the "Summons in and Adversary Proceeding"
1. Got a "Complaint against Bruce ___ to Avoid and and Recover
Transfers of
the Debtor's Property"

2. General Allegations
a. "<company> filed its bankruptcy petition under Chapter 11 of the
Bankruptcy
code on July <date>"
b. "Within 90 days immediately preceding the bankruptcy filing, the
Debtor made
the following transfers of its property to the Defendant: <amt> <date
of issue>"

3. Section entitled "First Claim for Relief (Preferential Transfers)
basically states, ".. Transfers made to Bruce ___ are avoidable as
perferential
transfers pursuant to 11 USC 547(b)..." And then states "...enabled
Defendent...to
receive more than....a case under Chapter 7..."

4. Section entitled "Second Claim for Relief (Fraudulent Transfer
under 11 USC 548)"
basically states, "The Transfers made by the Debtor... were made
within one(1) year
prior to the filing of the Debtor's bankruptcy petition." and
"...Debtor received less
than a reasonable equivalent value in exchange for the Transfers..."

5. Section entitled "Third Claim for Relief (Fraudulent Transfer under
CRS 38-8-101 et seq)"
basically states, "The Debtor made the Transfers...without
receiving a reasonably
equivalent value in exchange for the Transfers...."

6. I worked in the NJ branch office and the corporate office was in
CO. THat's why the proceedings
are taking place in CO.

7. The Summons was delivered on in an envelope from the Attorney and
contained the
raised seal papers from the District of Colorado "Deputy Clerk".

8. <company> still owes me money...I filed claims with the court for
the remaining 1/2 of my
severance and the unpaid, accured vacation time

Today, I got a Summons to pay back the severance payment I received from a company when I was terminated. The company declared Chapter 11 within 90 days after my termination. The law firm representing the company has sent me an offical summons stating that I must pay back the severance payment. They are saying that it is a "fraudulent transfer", was not necessary, and that the company did not receive any value in return. Therefore, I, as a Debitor, must pay back the money. We are talking about $5600.00. Previously, I received a unoffical letter from the same law-firm. The letter asked to return the money and said that I could pay 80% of the total and be done with the matter. I responded with details about the money being "severance" and that fair consideration was given. Also, I detailed that the company still owed me additional money as per the termination agreement. Hiring a lawyer is too expensive for me. Plus it would be have to be a lawyer in the companies home state of Colorado (I reside on the east coast.) What options do I have? Any suggestions are much appreciated. Thanks, Bruce