Is This Too Good To Be True?

[tigergem]

Well, in my case, an apparently functioning company has made a claim on behalf of a defunct company. But that defunct company is not the other defunct company that I was previously making payments to. Yeah it's all weird and convoluted. None of the assignments they presented as proof of claim actually work in their favor either.

[Dst1]

I don't see how a non-existent entity can file a proof of claim as it has no legal standing to do so.

But there might be some entity that could. Just because she has a contract with XYZ company doesn't mean that XYZ company is the only one with an interest in property. It's entirely possible that someone has bought the assets of XYZ company and the owner then just let the entity dissolve.

Who has the owner of the property been sending funds too? Is the bank account also in the name of XYZ company? If not, who is it.

BTW, I would not fight this in BK. I would fight the foreclosure and claim the company has no standing to foreclose since it doesn't exist.

[tigergem]

Let me know what you find out, please. I have a very similar situation, but even more convoluted than this. It involves multiple assignments and TWO defunct companies. As soon as my deadline to file objections to confirmation has passed, I need to file something on this... I think I am looking at a Motion to Determine Secured Status.

[MSbklawyer]

I just found a Mississippi statute that says that if a corporation has been administratively dissolved for less than 5 years, that it can be reinstated retroactively. But it has been more than 5 years since it was dissolved.

[BobMango]

That's true, but see, it was already out of existence when she took out the mortgage. It didn't exist when she promised to repay it.

I missed that in the first read, that's definitely an interesting wrinkle. I'll certainly be interested to learn how this turns out.

I wonder if there is some claim related to false representation when the loan was made?

[DeadManCrawling]

I wonder, too, whether the debt is owed. At the least, there should be UCC violations that take this to another court, and could result in sanctions there. Perhaps even removing the debt.

In our Corp it is vital to file certain things and so on, as you all know. If we did not file those things, and were dissolved, it would presumably break not only UCC but result in a total mingling of funds, and should put the principals personal assets at risk in state court.

[HakunaMatata]

At first, I was appalled by the 30% and "friendly" combo. Who knows...maybe these folks were truly friendly family?!

Very interesting. Keep us posted! (Oh, and if you find out HSBC didn't exist ten years ago, let me know!)

[momofthree]

I'm intrigued. Keep us posted.

[MSbklawyer]

My understanding is that when a company is administratively dissolved by the state, any property owned by the company will revert to the principals of the dissolved company. At least this is how it works in Washington state, based on my experience.

My guess is that whoever was cashing the checks would be that person or persons.

That's true, but see, it was already out of existence when she took out the mortgage. It didn't exist when she promised to repay it.

You're the lawyer, you tell us! ;-)

I'm researching it. I just ran across this an hour or two ago.

[flyinbroke]

You're the lawyer, you tell us! ;-)

[BobMango]

My understanding is that when a company is administratively dissolved by the state, any property owned by the company will revert to the principals of the dissolved company. At least this is how it works in Washington state, based on my experience.

My guess is that whoever was cashing the checks would be that person or persons.

[MSbklawyer]

This is sort of convoluted, so bear with me:

About 2 years ago my client took a $20,000 second mortgage on her home with "Friendly Family Finance Company, Inc." at a ~ 30% interest rate. Naturally, she fell behind and now the finance company is initiating foreclosure proceedings. A recent appraisal shows about $5000 in equity above the first mortgage, so there's no way we can strip the second off.

The note signed by my client, the deed of trust, in fact every piece of paper connected with the transaction refers to the lender as "Friendly Family Finance Company, Inc." The prommisory note says "I promise to pay Friendly Family Finance Company, Inc. . . " and so on.

So today, in an effort to find out who the company's attorney is, I went to the corporation page on the Mississippi Secretary of State's website and looked up "Friendly Family Finance Company, Inc." What I found was, there is no such company! It hasn't existed in over 10 years. It was administratively dissolved by the Secretary of State long ago because the owner didn't pay the annual corporate fees.

So essentially, my client promised to repay a non-existent entity. The mortgage is held by a non-existent entity. So, to whom, if anyone does my client owe her payments? Can a non-existent entity file a valid proof of claim?

Is the second mortgage enforceable by ANYONE?