#14
Enforcement & BankruptcyHigh Risk
The company suddenly files for bankruptcy, but you know it still has assets
Sham Bankruptcy
Why It's Dangerous
Sham bankruptcy is an unlawful scheme to evade debt by fabricating the appearance of insolvency. A company may transfer its assets to affiliated companies or individuals and then file for bankruptcy to write off its debts.
Real Case
After losing the case, the opposing company suddenly filed for bankruptcy, claiming it had no assets left to enforce against. The client's own investigation found that, two months before filing, the company had transferred large amounts of assets at deeply discounted prices to a new company set up by the legal representative's relatives.
* This case has been anonymized. Details have been adjusted to protect privacy.
What To Do
1
The moment you spot signs of asset transfer, apply for a property preservation order immediately2
Investigate the opposing company's recent equity changes and asset movements3
Report suspected sham bankruptcy to the court4
Watch whether the opposing legal representative sets up a new company during the bankruptcy process