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Path: utzoo!linus!security!genrad!grkermit!masscomp!clyde!burl!hou3c!hocda!houxm!ihnp4!ihnss!warren
From: warren@ihnss.UUCP (Warren Montgomery)
Newsgroups: net.legal
Subject: Unintentional creditors in business bankrupcies
Message-ID: <1823@ihnss.UUCP>
Date: Fri, 9-Dec-83 09:57:38 EST
Article-I.D.: ihnss.1823
Posted: Fri Dec  9 09:57:38 1983
Date-Received: Sat, 10-Dec-83 22:34:36 EST
Organization: AT&T Bell Labs, Naperville, Il
Lines: 29

Twice now we have become unintentional and unwilling participants in
a business bankrupcy.  Once years ago when our landlord (a giant
real estate company) declared bankrupcy and tied up our security
deposit, and more recently when a mail order company declared
bankrupcy after cashing a check but before sending the merchandise. 
In both cases we wound up as creditors, which was a surprise since
we extended no credit to either of these companies.  What happened
strikes me as theft or fraud, but apparently is perfectly legal and
can happen to anyone.

I gather that in many areas, more recent laws now protect security
deposits from such actions, but the mail order problem remains.  In
our case the money involved is minimal, however people who order
expensive items by mail should be aware of the danger that if the
supplier goes bankrupt, apparently they can take your money to pay
other debts and leave you with nothing but paperwork.

Since I do not intend to give up all mail order business, I would
like to know what, if anything, can be done to prevent this from
happening.  If I walk into a store, pick out merchandise, pay for
it, and leave, I am in no danger if the store goes bankrupt.  I
don't see why conducting the transaction by mail makes it any
different.
-- 

	Warren Montgomery
	ihnss!warren
	IH x2494