SF Weekly's deadbeat dad - Page 2

Village Voice Media tries to hide its money to duck verdict in Guardian lawsuit
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But if money is moved out of a company to frustrate a creditor, that can run afoul of laws that govern improper transfers.

"If you do something to stiff your creditors, the fraudulent transfer laws come into play," Adkisson said.

When companies have debt that exceeds their ability to pay, a typical option is bankruptcy - that's what more than 70 asbestos companies have done in the United States. Bankruptcy isn't perfect for creditors, and there's a lot of controversy over the practice, but at least it allows a court to supervise a plan to pay some of the debt. And in a bankruptcy, the shareholders of a corporation are wiped out.

In this case, VVM is placing itself in a strange and potentially perilous situation. The company is saying that it's protected from any judgments, and thus from any creditors -- meaning that any vendors, suppliers, contractors or other creditors that VVM decides to stiff would have no easy legal recourse.

But there's no bankruptcy and as far as we know, the company is paying its other debts. So VVM is apparently seeking to stiff a single creditor - which in itself is a legal issue -- and is doing so while the shareholders, including those who participated in an illegal predatory pricing scheme, pay no penalty at all.

The ultimate problem with these schemes is that, in the long run, they don't always work. "There are very few ways to do this that are bulletproof," Stein, who creates asset-protection programs for a living, explained. Instead, the experts tend to agree, asset-protection is mostly about delaying justice -- it's a way to make it expensive and time-consuming for a creditor to get to the money. It's a legal game, a tactic to frustrate a less-well-funded individual or company by dragging the legal issues out even further.

"It's my perspective that if a debtor has money, there's a way to get to it," Richard Goldstein, a lawyer and expert in collections, told us. And, of course, the Guardian is mounting an aggressive collection effort.

It's quite a length to go to in an effort to avoid paying a competitor who was harmed by illegal pricing and predatory competition. "In the end," Goldstein said, "there are only two ways to avoid a judgment. You can have no assets at all, or you can undermine your own business and your own company to make it hard for someone to collect a debt."

Calls to the Bank of Bank of Montreal, were not returned by press time. However, VVM Executive Editor Mike Lacey posted a long response to our written questions on SF Weeky's blog.

In between insults, he responded -- sort of -- to a few points we raised.

He said, for example:

"The case is on appeal. You are not entitled to a penny."

That's wrong. By law, if VVM had posted an appeal bond, The Guardian would be unable to collect until the appeals had run their course. Of course, a bond would guarantee that the Guardian ultimately would get the money if the verdict were upheld.

With no bond posted, the Guardian has every legal right to begin collecting the judgment.

Lacey states that "I'm not going to discuss our banking relationship with a miscreant who makes up slander. Perhaps your lawyers can enlighten you. (But if your lawyers have led you into a blind alley, do you really trust their insight?)"

Interesting comment, considering that our lawyers -- Ralph Alldredge, Richard Hill and E. Craig Moody -- not only won the case, in front of a jury, but won a California Lawyers of the Year award from California Lawyer magazine for the case, which the magazine called one of the most important lawsuits of the year.

Most of the rest of his statement is a rehash of the claims VVM threw out in court -- all of which were proven false.