MIAMI-DADE COUNTY, Fla. – When it comes to getting tangled up in a bankruptcy case, there are no guarantees.
"You're not going to get as much [money] as you'd like to get," said Ishaq Kundawala, a law professor at Nova Southeastern University.
Kundawala specializes in bankruptcy law and said whenever a company files a bankruptcy case, customers who paid that company for services or products and never received them may not get anything at all.
Kundawala was referring to a recent Leave it to Layron investigation involving at least 100 creditors who paid more than $330,000 in deposits to Exclusive Windows and Doors LLC.
Luis Pimentel owns the Miami-Dade-based company.
The company filed a Chapter 7 bankruptcy case with the Southern District of Florida in February.
"And there could be more that he didn't list in the schedules, which could be troubling," Kundawala said.
The trustee assigned to the case also used the word "troubling" in a statement sent to the the LITL team:
"The allegations raised by several purportedly defrauded customers are troubling," the statement read. "The trustee is currently investigating the debtor and potential assets belonging to the debtor's bankruptcy estate. The trustee and her professionals will vigilantly pursue and administer all viable assets and potential causes of action, in order to maximize the recovery and distribution available to creditors and defrauded customers."
Kundawala said it's a strong statement.
"When you start to see red flags like that, and you think of fraud, you think that this debtor might be in trouble," Kundawala said.
He said the fact that the trustee is already involved so early in the Exclusive Doors and Windows petition is also unusual.
"Dishonest debtors, those who engage in fraudulent conduct, they don't get the benefit of the bankruptcy system," Kundawala said.
Exclusive Doors and Windows initially worked out of a Fontainebleau Boulevard address -- the same address listed on the company's Chapter 7 filing. Later, the company started doing business as Exclusive Accordions.
State records show the name changed again last fall to Miami-Dade Accordions. Months later, the LITL team learned the owner signed a lease for a warehouse space in Hialeah Gardens.
A customer who is also listed as one of Exclusive's creditors contacted the LITL team after losing a $2,000 deposit. That customer provided photos of a worker at the Hialeah Gardens warehouse days after Exclusive Doors and Windows filed its bankruptcy case.
"And if this business has been operating after they've filed a Chapter 7 bankruptcy, that's going to be strong evidence of bad faith conduct," Kundawala said, because a Chapter 7 bankruptcy case means the business is ceasing operations.
Despite the red flags, Kundawala said don't wave the white flag just yet.
He said anyone with a claim should submit a "proof of claim" form with the bankruptcy court before the April 22 deadline.
Those creditors should also pay special attention to Question 12 on that form: "Is all or part of the claim entitled to priority under 11 U.S.C. § 507(a)?"
Kundawala said the answer is, "Yes!"
"Check the priority claim box," he said. "Priority claims jump ahead and get more favorable treatment in a bankruptcy case."
Kundawala said folks who paid a deposit, but who never received the products and services they paid for, are entitled to priority standing. They should also check the box that indicates, "up to $3,025* of deposits toward purchase, lease, or rental of property or services for personal, family, or household use. 11 U.S.C § 507(a)(7)."
"They're more likely to get paid something, rather than nothing," Kundawala said.
So far, the bankruptcy trustee assigned to the case reported 34 claims have been filed. Those claims total more than $428,000.