Protecting Both Business Finances And Futures

How to protect a judgment from being lost in bankruptcy

On Behalf of | Nov 21, 2014 | Business Litigation |

One of the things that businesses consider when bringing a lawsuit is the potential for collecting on a judgment that may be awarded. Indeed, when bringing suit against a large multi-national company, this may not be a difficult question to answer. But when suing a small company, images of “The Rainmaker” come to mind.

For those who do not remember, the insurance company that Matt Damon and Danny DeVito sued ended up going bankrupt, so the jury award that was handed down was essentially not worth the paper it was printed on.

Indeed, that is the world of make believe, but it is also an example of art imitating life. Nevertheless, there is an important distinction that can keep companies from claiming bankruptcy as a reason for not paying damages obtained from a jury award. Under the U.S. Bankruptcy Code, civil damages awarded as a result of fraud or intentional misrepresentation may not be discharged. The same could be said for punitive damages awarded as a result of such actions.

So for those businesses that choose to seek monetary damages from another entity based on a breach of contract claim, it may well be worth exploring the possibility of bringing fraud claims in addition. By bringing this tandem of claims, you may be able to protect against the likelihood that your jury award may be lost in bankruptcy.

Of course, the preceding is not legal advice, and every individual situation is different. As such, discussing your case with an experienced attorney is prudent.



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