Chicago Based owners of the Giordano's Restaurant chain sued for taking funds prior to filing Chapter 11 Bankruptcy.

Giordano's, a local Chicago restaurant chain, filed for Chapter 11 Bankruptcy in early 2011. On January 13, 2012 the Chapter 11 Trustee, Philip V. Martino, filed a complaint seeking the return of over four million dollars from the owners of the Giordano's Restaurant chain. In the years prior to the filing of the Giordano's Chapter 11 Bankruptcy the owners used business funds to pay their personal bills, including the rents and utilities for their home, and the repairs for their vehicle.  They also increased their salaries to just under two million dollars per year, and transferred business funds for their personal use. At the same time the Giordano's owners were unable to pay their business loans and continually defaulted on those loans for a period in excess of 10 months. In his complaint the Trustee likened these pre-filing transfers to looting the business accounts for the personal benefits of the owners and alleged it caused harm to the Giordano's Restaurant chains and their creditors. In essence he alleges that the owners in this case were bleeding their company while it was insolvent and unable to pay its debts,. If the Bankruptcy Court sides with the Trustee in finding these transfers were improper or fraudulent the owners will be forced to return those funds to the bankruptcy estate to be used to satisfy the creditors of the Giordano's Restaurant chains.  While the transfers in this particular case are on a much larger scale than normally seen in the average bankruptcy case the transferring or misusing of assets prior to the filing of the bankruptcy is not an uncommon problem. A more common scenario is transferring the title of a car or giving funds to a family member or friend immediately prior to the filing of the bankruptcy case. What most people don't realize when taking these kinds of actions can be considered a fraud by the bankruptcy courts, which in turn can lead to more problems than those they had prior to filing bankruptcy. However, without bankruptcy experience or knowledge many people make decisions prior filing bankruptcy, or prior to consulting an attorney that do them more harm in the long run.

 

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