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Comment by crazygringo | Hacker News Reader

But the end of the blog post says the man sued and won.

But the store closed to get out of paying.

Which makes no sense if the store was corporate-owned. So why isn't the corporation paying?

The store in question was a franchise so potentially the liability will be limited to just the assets of that franchise. But there's a lot of weird stuff here and it looks like the corporation may have (in a legally questionable manner) removed assets from the store to the corporation during proceedings to shield them.

Courts are allowed to pierce the corporate veil when that happens.

They absolutely are and a good lawyer, I'm sure, could audit the accounts and find some misdeeds - the issue is that the auditing and even getting access to those records in court is extremely expensive. To my knowledge there isn't a way to trigger that kind of a discovery in small claims so you need to go through the pricey legal system.

The money in question here is the proceeds from selling a collection valued at 200k - the recovery (unless you start to get into punitive territory) is likely to be rather meager... and it's a large risk so there may be few bites on firms willing to take it on purely commission.

> unless you start to get into punitive territory

Is there not potential grounds here for punitive damages? The false police reports and harassment seem egregious even by corporate standards.

And the corporation is valued at $400 million, so it's not like the pot isn't sweet enough

In the UK you can make an order of information to compel directors of a company that is in debt to answer questions about company assets, accounts and records under oath. This can be done in County Court and my understanding it is inexpensive. I'm not sure how useful this is for carrying out an audit because I think its meant to be used for seeing if the debtor has the ability to pay. I think generally incorrect trading during an insolvency is meant to be discovered by the receivers during the insolvency process. Also, I'm not sure if there is an equivalent to an order of information in the US system.

the issue is that the auditing and even getting access to those records in court is extremely expensive.

In most cases, the bankruptcy trustee will be doing that work already.

But in a case like this, it's probably not going to be necessary. Courts usually pierce the corporate veil in situations involving the debts of wholly-owned subsidiaries. It happens frequently enough that its actually news when they don't pierce the veil. This is because corporations usually do a bad job of doing all the things that are necessary to maintain the liability shield in court.

In a nutshell: it requires treating the subsidiary as an entirely separate entity, with separate books, accounts, back office, officers/management, etc. As this is extremely inefficient, most corporations don't bother. The only corporations that do are the ones that deal with company-killing litigation regularly enough that it's worth it to absorb the cost of maintaining the liability shield.

Seems like it would be hard to know which blue Lego was Bryan’s

It was sealed sets, still NIB, not individual pieces. No one would bother selling $200k of loose bricks on consignment.

Let me rephrase: “blue Lego set”

This is a collectible market so Lego sets aren’t fungible, so being unable to keep track of that sounds like negligence.

*grey, since it was Star Wars

Somewhere in one of the long videos, they mentioned that there were unique stickers on each of his items that he was selling on consignment. They had to have known which items were his.

A representative of the corporation, while taking over the store, expressly states that the corporation is taking over the consignment agreement, on camera and with several witnesses.

because, i assume, that they sued the salem location directly?

They wouldn't make any sense, if the whole thing started because corporate took over control and ownership the location.

It sounds like corporate took away ownership and gave it to a new franchisee.

The original franchisee claims to have lost their life savings in that move. I have no idea how exactly that happened. Their story really sounds like something from Russia back when western investors had their company simply taken from them by someone well-connected.

It sounds like the original franchisee doesn’t want to admit that they were losing a lot of money already. Only someone really desperate would take on a $200K lego collection and only collect a 10% consignment fee. It would also explain the corporate “takeover” if they were already behind on paying their franchise fees or whatever they might have owed to corporate.

That being said, it’s not illegal to be a bad business person, and none of that excuses the subsequent behavior by BAM corporate or the new franchise owner.

From what I understand, the original franchisee wanted to sell the store because they wanted to leave the US (for "political reasons"; I suspect they don't want to live in Trumpland anymore, but that's pure speculation). The way it appears, the moment they announced that desire to sell, B&M corporate showed up to take control of the shop. And the consignment.

* The store's consignment fee was 35%

* They had sold about half of the consigned inventory

* The old franchise owner said they had a job offer outside the country

* Said franchise owner was current on a restructured fee schedule that, they allege, was the direct result of corporate bungling the transfer of accounts from the franchise owner previous to them

I definitely heard 10% first and only later 35%. For some reason the videos don't have transcripts and the Gemini AI isn't available, so I can't try to search for it. But I'm 100% sure that 10% was the figure mentioned first (maybe I misunderstood and it was just being used as an example). If the real figure is 35%, then I retract any comments about them making a bad business deal.

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