Local dealer owes us $20,000 but just closed this morning. What to do?
November 11, 2014 1:25 PM   Subscribe

We are a well known bicycle brand, and one of our local dealers closed up shop over night with no notice to us or even their employees. They have over $20,000 in debt with us. What are our options? Our dealer owes us over $20,000 in debt for stock, with some invoices close to 4 months past due.

The closing of the shop was a complete shock to us, and probably their employees too who were seen standing outside the locked-up shop this morning. The company is a very well known establishment that has been part of the community for many years. To complicate the issue the owner of the business is not a US National and rumors have it that he is planning to leave the country asap. What are our options? Thank you!
posted by neillsom to Work & Money (19 answers total) 2 users marked this as a favorite
Lawyer, lawyer, lawyer, lawyer.

Call a lawyer.
posted by OnTheLastCastle at 1:28 PM on November 11, 2014 [36 favorites]

Call a lawyer. Sorry if you consider that a cliche, but this is one of the most "call a lawyer" situations I've seen on AskMe that doesn't involve getting arrested or going to jail.

Also, FYI you are specifically asking for legal advice in this question. I'm not sure if you understand that or not, but presenting your facts that may involve legal disputes and asking people to analyze them and give you options for what to do - that is basically the definition of "legal advice." So, any substantive answers here should be taken with a huge grain of salt.
posted by Joey Buttafoucault at 1:47 PM on November 11, 2014 [11 favorites]

Yeah, I hate to be part of the choir, but lawyer right now and put a hurry on it. Often the early bird catches the worm with regards to at least getting your stock back or at least something.
posted by Brockles at 1:50 PM on November 11, 2014 [1 favorite]

Who knows? Oh a lawyer.

You might be able to get your stock back. But be prepared to write it off.
posted by Ruthless Bunny at 1:56 PM on November 11, 2014 [1 favorite]

Best answer: In general terms: when a business fails in the US, it's supposed to file for bankruptcy. There are different types of bankruptcy, depending on whether the business wants to continue doing business but discharge some of its debts (Chapter 11) or whether it's going to liquidate everything and cease to exist (Chapter 7.) People to whom the business owes money are creditors, and they're paid the money that they're owed out of the company's remaining assets, in a particular order of priority. Employees who are owed money generally have priority over suppliers of the business, for example.

However, there are practically an infinite number of variations and caveats and subclauses in all of the above, and if the owner decides to engage in Shady Shitâ„¢, there are even more things that can go wrong. Wherefore, as everyone has said above, you need a lawyer promptly.
posted by Johnny Assay at 2:07 PM on November 11, 2014 [1 favorite]

Lawyer here, not yours of course: You're looking for a bankruptcy / creditor's rights attorney.
posted by resurrexit at 2:13 PM on November 11, 2014 [11 favorites]

Talk to your accountant NOW and find out if you actually still own the bikes, ie did they buy them from you or are they in possession of the bikes but do not own them. If you still own the bikes/stock and can prove it the police/landlord/bankruptcy court will let you take it back. Check in your jurisdiction but most places if you get your proof together in writing and have permission to be on the property (landlord) you can take stuff they haven't completed the purchase on back. Do this now, start with your accountant then check in with a lawyer. Don't go over there with a boltcutter, you likely don't need to break any laws for starters and $20k is not worth being arrested over. Do it right.
posted by fshgrl at 2:13 PM on November 11, 2014 [6 favorites]

Additional lawyer-but-not-your-lawyer tip: Call one soon, because there are often concrete steps you can take if you have secured any of that debt owed to you.
posted by resurrexit at 2:14 PM on November 11, 2014 [2 favorites]

nthing get a lawyer. A local business that I was involved with just rolled up under similar circumstances, and there was a bankruptcy hearing, an appointed trustee, etc. Once the process starts it is a pretty well-oiled (if expensive) machine, but if you are not there in the right place at the right time with the right paperwork there does exist a chance that you could end up getting screwed. Your chances at recovering what you're owed depend on who else the business owes and how much, and what their assets were/are. None of us can say from afar.

Do be sure to retain any sort of paperwork or correspondence you have on hand, particularly if anything exists in computer systems where it might expire over time. (I know someone who got screwed in a bankruptcy proceeding that way.)
posted by Kadin2048 at 2:39 PM on November 11, 2014 [1 favorite]

You're a well known bicycle brand; don't you have a General Counsel or at least a lawyer on retainer? You make a product that is litigated over all the time...
posted by randomkeystrike at 2:44 PM on November 11, 2014 [17 favorites]

Also, a good route to finding an attorney may be to ask your accountant / CPA / tax preparer, if you have one, for a referral. An experienced business accountant will probably know someone they can recommend. Also, they may need to work with the lawyer to put together the paperwork, so it is beneficial if it's someone they work with.

That's where I'd start if I was in a similar position, anyway.
posted by Kadin2048 at 2:46 PM on November 11, 2014

Call the IRS fraud division. Call the local DA. Call the local news.
There's a reasonable chance he has done something criminal, which could get his travel restricted so he can't leave the country.
Yeh, consult a lawyer who practices in the dealer's state, but realize there's a good chance you'd be just throwing good money after bad. May be worthwhile contacting their other vendors (and employees) to pool your resources.
posted by Sophont at 3:02 PM on November 11, 2014 [1 favorite]

Lawyer up right now.

One of the hardest aspects to cope with in business is that customers will screw you over. I've seen small businesses get left holding the bag after extending credit to a trusted customer who was (behind the scenes) just barely holding on. You never really know your customers as well as you think, and someone who has fallen behind on paying the bills is a bad sign.
posted by jgreco at 3:02 PM on November 11, 2014

Is it normal for you to let invoices get to 4 months past due and $20,000 without any sign of payment? If so, now might be a good time to review that.

Call a lawyer.

I'm sorry that you have to deal with this.
posted by kinddieserzeit at 3:24 PM on November 11, 2014 [2 favorites]

If you still own the bikes/stock and can prove it the police/landlord/bankruptcy court will let you take it back.

IANAL, TINL, but what you may need to do here dependent on state law is seek a writ of replevin, with which you can show up with a sheriff's deputy or other LE and gain access to take back the stock that you own. You will, of course, have to do the removal with your own people and equipment.

Again, IANAL, but this should be a fairly simple matter of filing the notice and having your lawyer attend a hearing before a judge, which the dealer could easily fail to dispute, and then get your stuff toot sweet before any bankruptcy filing -- which would put any such action under federal jurisdiction with attendant delay and expense for you.

(I have experience getting an expensive antique stove back from a refurbisher this way. It ended up being uneventful but up to getting it physically onboard the truck it was pretty nerve-wracking.)
posted by dhartung at 4:04 PM on November 11, 2014 [2 favorites]

Yup, get a lawyer, and remember the people on Metafilter that are best equipped to give you good advice are the ones who won't give you any advice - because it would constitute legal advice (I think, I'm not a lawyer).
posted by el io at 10:44 PM on November 11, 2014 [1 favorite]

Have you tried contacting him? Ask him how much of the stock he has left. If it is at least 75%, accept it back as full payment for the debt (still cheaper than a lawyer) and ask him for his two best employees.
posted by myselfasme at 6:17 AM on November 12, 2014 [1 favorite]

If you're a well-known bicycle brand, you have legal counsel on-staff or retainer. Manufacturers/Importers/Wholesalers get into legal brouhahas all the time, usually over who owes who what and when. Are you a new brand? Well, this is a learning opportunity - you need a lawyer to do business. This is true of a local comic book shop and of billion-dollar brands.

On the other hand, if this is a hypothetical for a novel or screenplay or such, where the side-effects of speculative woolgathering are minimal, that would be good to know.
posted by Slap*Happy at 9:46 AM on November 12, 2014

After you call your lawyer, call your accountant. Taking the $20k loss may be cheaper than paying attorneys.
posted by jeffamaphone at 9:55 AM on November 12, 2014

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