Good faith effort to return money failed - they show up 4 years later - what does my friend do?

December 13, 2011 6:47 PM

(YANML filter) Asking for a friend: "About 4 years ago, this company in (foreign country) gave my company a $3,000 deposit to negotiate a deal. The deal never went thru, so they were supposed to get their money back. They sent over incomplete wire instructions and I requested them to send the right info. Never heard back. When I closed the company, I tried maybe 5-6 times to get this info and they never replied. So they had their money with me all these years, neglected it and now they're asking for it back. Of course, that money is gone."

What is the legal obligation there (especially if it's outside the US) if s/he made many good-faith (and documented) efforts to return the funds but the other party was unresponsive?

Friend will most likely consult a lawyer but I wanted to get your take on it as added information. Options are good things.

Thanks!

posted by Mysticalchick to work & money (18 answers total)

Dunno, but the moral obligation seems pretty clear. Your friend had their money and acknowledges that they deserved it back then. If it was me, I'd set up some sort of payment plan and get it back to them.
posted by BlahLaLa at 6:56 PM on December 13, 2011 [1 favorite]

The lawyer is the person to listen to. This is not legal advice.
posted by Ironmouth at 6:57 PM on December 13, 2011 [1 favorite]

Your friend should consult his lawyer, as his company may have had specific duties with regard to the unclaimed funds. You don't say where your friend's company was located, but in the US most (if not all) states require companies to surrender unclaimed property to the state. For example, in California the state controller operates an Unclaimed Property Program to which companies are requires to surrender unclaimed property and companies that fail to comply can be subject to fines.
posted by RichardP at 7:05 PM on December 13, 2011 [1 favorite]

There are a lot of different legal systems with varied policies on this sort of thing; "outside of the US" isn't specific enough. Even within countries, different states/provinces might have different rules... and the deposit might have come with a contract, the terms of which might be quite important to the question.

This is all too vague and we don't know enough to give any good help.
posted by the young rope-rider at 7:06 PM on December 13, 2011 [3 favorites]

"Of course, that money is gone."

My uninformed unlegal take is that that statement took me completely by surprise. Why is it gone?
posted by jacalata at 7:07 PM on December 13, 2011 [3 favorites]

Why is it gone?

Because the company is closed and has no assets?
posted by DarlingBri at 7:25 PM on December 13, 2011 [1 favorite]

They answer may depend on the nature of the company and your friend's relationship to it. Was this a corporation that has been formally wound-down or sold? It's hard to see how your friend would be liable for that. On the other hand, if it was a sole proprietorship or a DBA that was really just a veneer over your friend doing business as herself, then she may still be liable.

All that said, even if there is legal liability it's hard for me to imagine how that would be enforced across national borders. It seems like it wouldn't be worth it for the $3K.

Now there may be a more obligation to return the money, but you didn't ask about that.
posted by alms at 7:35 PM on December 13, 2011

And where did the assets go then? Into his pocket? If he didn't consult anyone on what his obligations were for outstanding debts when he closed, then maybe he didn't even close the company down properly.

Here's more internet advice: "If a particular creditor does not receive notice that your LLC or corporation is closing down, that creditor's claim may survive the closing."
posted by jacalata at 7:42 PM on December 13, 2011

Trying to answer this question on these limited facts would be malpractice. It is literally impossible to answer the question without more information.

Of course, lots of questions are hard to answer in law. You know what parties often do? They settle. For something more than $0 and less than the amount claimed.
posted by J. Wilson at 8:09 PM on December 13, 2011 [3 favorites]

>>All that said, even if there is legal liability it's hard for me to imagine how that would be enforced across national borders.

A foreign entity could certainly enforce liability the same way a U.S. entity would: in a court in the U.S.
posted by J. Wilson at 8:12 PM on December 13, 2011

Go directly to lawyer. Do not ask Metafilter; do not collect $200. Unless your friend is planning to collect the $200 in order to establish a repayment plan.
posted by thomas j wise at 8:22 PM on December 13, 2011

Tell them the company closed and the assets are no longer there. Wait their reply. Then, determine if she needs to speak to a lawyer.
posted by JohnnyGunn at 8:38 PM on December 13, 2011 [1 favorite]

Your friend owes them nothing. If they actually threaten a suit, settle for a nominal amount.
posted by michaelh at 9:22 PM on December 13, 2011

"What is the legal obligation?" - No idea, but I can't imagine it'd be cost effective for them to sue your friend in US court over $3000.
posted by hamsterdam at 9:39 PM on December 13, 2011 [1 favorite]

To play devil's advocate -- debt collection actions are brought all the time for amounts of $3,000 or less. And local counsel in a debt collection action costs whatever it costs, regardless of where the hiring client is located. This idea that they can't afford to sue for $3,000 could easily be incorrect.
posted by J. Wilson at 9:59 PM on December 13, 2011

If this money was unclaimed over a year before your friend's company went out of business, why didn't s/he turn the money over to the state? I know in my state, we have to turn over all unclaimed or unreturnable funds to the state on a yearly basis. We also have to file a report every year even if there are no such funds.

And your friend might want to consider that if they could leave $3000 for several years and just now come after it, this company might have the means and will to go after s/he for that money and could make a good case about interest too.
posted by jaimystery at 4:00 AM on December 14, 2011

Thanks, everyone. I appreciate all the perspectives. Of course, my friend will consult a lawyer as I said in the original post. I just wanted some alternative perspectives to give some options for them now.

I'll pass all these along. And yes, there are no funds because the company closed almost 4 years ago.

Thanks again.
posted by Mysticalchick at 4:02 AM on December 14, 2011

>And yes, there are no funds because the company closed almost 4 years ago.

The point that was being made by several posters is that the funds may have been improperly converted from the company to its owner's own name, to the detriment of at least one creditor, in the course of winding up.
posted by megatherium at 5:25 AM on December 14, 2011 [3 favorites]