• March 26, 2010

Minnesota’s Sleep Number company, Select Comfort, had a commercial transaction gone bad with a company that has now gone bankrupt, an altogether too common scenario over the past year or two.  And from Select Comfort’s allegations, it would appear that money was paid, but services not provided.  However, there are at least a few problems in suing a bankrupt company that owes money — the automatic stay and it is no fun (and not without cost) getting a judicial award to collect money from an entity that has no money.

These challenges are not lost on Select Comfort, of course.  So it has filed a complaint this week against a handful of New York businesses and individuals — strictly speaking, not the company with which it did business — but Select Comfort’s complaint has something of an old-time revival refrain running through several paragraphs early on: “one company with one pot of cash.”  Time will tell whether the tune will catch on.  The New York defendants may well launch into a chorus of It Ain’t Me Babe by Minnesota’s own Bob Dylan.

The scenario of certain or near certain liability against a judgment-proof defendant is clearly endemic to our current economic circumstances.  (Indeed, the post below, “Lessons from a Legal Mess,” would appear to have arisen in such a scenario.  Note U.S. Dist. Judge Patrick Schiltz’s (D. Minn.) default judgment for the Murrins issued yesterday (found here).  A truly wronged litigant, without recourse through no fault of its own, will overreach from time to time.)

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