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Khachir7

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Reply with quote  #1 
How can the CEO be even asking for a permission to cash the checks which BD does not intend to use to buy any metal with? Of course, I oppose it. Wouldn't everyone? JG, could you kindly advise how, exactly, it can be prevented. I understand that we can object. But when and how? Thank you!

If the owners are worried that their business is low on cash, they are welcome to use their own funds to keep it afloat. We have funded this experiment at business long enough.

P.S. Would it be ok to ask the bank to block the checks?
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tboll

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Reply with quote  #2 
>How can the CEO be even asking for a permission to cash the checks which BD does not intend to use to buy any metal with? 

I think the problem here is that all previous customers who don't have their metal can use the same argument.  "How could BD have cashed my check and never even purchase the gold I ordered?"  And of course the CEO will say, "We intend to make everyone whole again (even these late payers) once we get back on our feet again (or after we sell/license our magnificent software)".
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JG

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Reply with quote  #3 
Quote:
Originally Posted by Khachir7
How can the CEO be even asking for a permission to cash the checks which BD does not intend to use to buy any metal with? Of course, I oppose it. Wouldn't everyone? JG, could you kindly advise how, exactly, it can be prevented. I understand that we can object. But when and how? Thank you! If the owners are worried that their business is low on cash, they are welcome to use their own funds to keep it afloat. We have funded this experiment at business long enough. P.S. Would it be ok to ask the bank to block the checks?


According to the court filing, the law says that "property in the possession of a debtor on the petition date is presumptively property of the estate" and that "The Terms of Service Agreement under which the website transactions were conducted did not appear to create any special escrow or create a lien with respect to funds tendered to BDI."

In other words, the law seems to say that the checks are part of the estate. So not cashing them would actually harm creditors (of course, also helping those who sent the checks).

If it were me, I would almost certainly stop payment of the check. However, there could be legal implications (e.g. fines listed in the terms, you could be breaking the contract, etc.). But given what Bullion Direct was doing, I personally don't see an issue with stopping payment of the check.

The proper way to handle it would be to file an objection with the court (I'm not sure what that would entail, e.g. if you have to go through an attorney to do so).


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areabird

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Reply with quote  #4 
To add some nuance to JG's post, the primary risk you run in issuing a stop payment request on a check held by the debtor but not yet cashed is that you could be in violation of the automatic stay that went into effect when the bankruptcy was filed.

Here is the argument:

- Under the Bankruptcy Code, 11 U.S.C. 362(a)(3), once the company filed for bankruptcy, "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate" was automatically stayed, i.e., prohibited without getting prior court permission.

- Under the Bankruptcy Code, 11 U,S.C. 541(a)(1) provides that, with certain narrow exceptions, property of the estate includes "all legal or equitable interests of the debtor in property as of the commencement of the case."

- The debtor is claiming that the checks are property of the bankruptcy estate because the debtor has a legal or equitable interest in the checks.

- If a customer/creditor stops payment on its check, the debtor may argue that the customer has exercised control over estate property and therefore violated the stay.

- The penalties for violating the automatic stay can include a court order directing return of the property, actual damages, punitive damages, attorney's fees and costs, as well as injunctive relief (i.e., a court order prohibiting you from doing certain things).

I would caution people over assuming that the Bankruptcy Court will see the group of "uncashed check" customers as being any more or any less sympathetic a group of victims that people who bought metal and may no longer have anything to show for it, or any other creditor for that matter. Remember, the key driver in a bankruptcy is to make sure that all creditors are treated (a) in accordance with the priority scheme set forth in the Bankruptcy Code and (b) ratably/equally vis-a-vis other creditors in their class. The court's job is to oversee the collection of all assets of the estate and then the disposal of those assets in accordance with the Code.

This is not legal advice and I'm not advising anyone to act or not act a certain way. Everyone has to make their own calculated risk evaluation - I'm just trying to provide some information on what the risks are.
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spainte

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Reply with quote  #5 
Not a lawyer here... standard disclaimer applies.

Wonder if draining your checking account on an outstanding check, to bring the balance down so as to not cover the amount, cancel over-draft protection.... essentially intentionally force the check to bounce. I'd rather incur a few bank charges than have a substantial unrecoverable amount withdrawn.

Again, not advocating such an action but thinking a bit outside the 'box'.
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tboll

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Reply with quote  #6 
I just read a post from a different thread about a person who had cashed out everything and was waiting for the completion of BD wiring his money to his bank.  Funny how it is FAIR in the eyes of the bankruptcy court that money coming IN to the company which was initially frozen is now (or likely soon to be) unfrozen and deposited into DIP account however money that was flowing OUT of the company and also frozen will be halted forever.  It seems pretty inconsistent.  Either complete the transactions in BOTH DIRECTION or terminate them consistently.  I'm sure the argument will be that the  incoming CHECKS were already delivered and in the hands of the business so they are slightly ahead of the accounts payable checks/wirings that were about to be processed.  Ironic, the way that business operated was that couldn't trust their customers and needed to not only have payment in hand before they did any order processing, but they also insisted on waiting 10 days for our checks to clear (since even old time customers could not be trusted to send good checks) and then to top it off, they didn't even bother to buy metal with the money.  They just used it for other purposes.  Ugh, so wrong on so many levels.
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BD BOINKED

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Reply with quote  #7 
I think I would argue that if they had not yet cashed the check, the money is not in their possession, and therefore not part of the estate. Stopping payment when you have very compelling reasons to believe that BD has no intention of fulfilling THEIR contractual obligation to you, should alleviate you of any wrong doing. They are the ones breaching the contract. I, of course, am no lawyer either but if I were in that position, I'd take the chance.

The courts allowing them to let BD cash checks that were written to them for a specific purpose, only to not be used for that purpose in unconscionable. It is basically allowing BD to steal more money to pay for their bankruptcy.
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Khachir7

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Posts: 72
Reply with quote  #8 
I stopped payment on the check. My argument is that the company grossly misrepresented its services to me, and I no longer want to enter into this transaction. I thought that I was sending the $ to buy a real, tangible product, where 1% was to be taken by BD. Instead, 100% of my $ was to be used to support BD's operations (before the bankruptcy!)
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bdhasmysilver

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Reply with quote  #9 

CM and his sorry excuse for a company obviously have no intentions of supplying the metal I purchased with my check.  Why shouldn’t I cancel my check to this crook so he can to finance his vastly overpaid lawyer and other friends whose job is to defend his sorry ass and see that we all receive as little as possible?  Not going to happen, check canceled.  Dear Chuckie, Kiss MA. 

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GWest

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Reply with quote  #10 
Quote:
Originally Posted by BD BOINKED
I think I would argue that if they had not yet cashed the check, the money is not in their possession, and therefore not part of the estate. Stopping payment when you have very compelling reasons to believe that BD has no intention of fulfilling THEIR contractual obligation to you, should alleviate you of any wrong doing. They are the ones breaching the contract. I, of course, am no lawyer either but if I were in that position, I'd take the chance.

The courts allowing them to let BD cash checks that were written to them for a specific purpose, only to not be used for that purpose in unconscionable. It is basically allowing BD to steal more money to pay for their bankruptcy.


I do have some legal experience with this and you are correct. One legal concept is called an anticipatory breach. You are canceling your payment (technically a breach on your part) because you anticipate that the other party will breach. Generally, the courts take a dim view of anticipatory breaches.

A competing legal concept is your right of self protection. The burden is on the party that stopped the check to demonstrate compelling evidence that BD's forthcoming breach was relatively certain. There is no doubt that you have that evidence due to a massive number of non-delivery events.

But we must also remember that the bankruptcy court stays all contracts. It may pose problems for you to wait until after the bankruptcy filing to assert a breach. Even before the filing, you were suffering from the inability to resell the metals you should have received within the FTC's 28-day rule. Now you have both the breach and actual damage from the breach in pre-bankruptcy events. It would help if you have a copy of the letter you sent to BD asserting this breach back before they filed. If you look hard enough, I'm sure you can find it. Still, because bankruptcy stays contracts, you may not be able to remain legally sanitary by stopping the check at this time.

If it were me, I would stop the check immediately and let them chase after me - which I doubt they will do. I can't imagine the court approving those legal expenses.

Some banks have two different check stops. Read the fine print. Some only protect for one year while others are permanent. I have seen stopped checks clear a year later when re-deposited. Remember, you are dealing with lawyers and other reptiles in this matter.

The fact that the lawyers can even approach the court with this request to cash checks shows the conspiratorial relationship between lawyers and courts. You know why the lawyers want to cash the checks. It has nothing to do with benefiting the creditors or the estate. The theory is that non-objecting customers actually want to establish their account receivable from the bankrupt estate. This is both hilarious and disgusting. It just confirms that nobody involved in this matter is your friend.


Addendum
I just spoke to a bankruptcy expert that has personally filed over 50 corporate bankruptcies. He has been on the front page of Los Angeles newspapers many times for his questionable real estate practices. I asked him about this business of having the bankruptcy estate cash these checks. He made three statements:

The lawyers are doing this so they can ultimately get that cash;
Creditors must speak up if they want to protect themselves from this thievery or it will be permitted;
The lawyers will take the judge's shoelaces if they think they can get away with it.

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