My grandmother, along with several life long friends, had their money invested with a company called Lydia Claydek Inc. It's a subprime auto lending company. Yesterday my grandma received news from another investor that the company is going bankrupt. After a little research I've found this seems to be the case.
http://mylci.wordpress.com/2008/12/2...-heard-rumors/

Lydia Clark has not notified her of this yet and interest payments have been current. My grandma lives off of the monthly interest she recieves from this investment, losing this money will devastate her. As I'm not financially savy I have a few questions.

If Lydia Clark has already filed bankruptcy are there any laws on when she has to notify investors?

What actions should my grandmother take, does she have any way to recover her funds?

As far as I know the money is unsecured, does any one know of any government assistance?

Probably the best thing for her to do is consult with a lawyer. She has very little money to do this. Any advice for what type of lawyer she should try to consult with? If she would lose her investment would it be reasonable to assume she could find a lawyer who would work pro bono to help recover her funds? I imagine a class action suit could be possible with the other investors as well.

Please do not reply by chastising her descion to have all of her money locked up in this one investment. I realize she should have diversivied and been weary of investing with a sub prime auto lender. She's had this money invested for 8 years and it's with a family memeber of a life long friend whom she trusted.

Any constructive advice is greatly needed and appreciated.

Thank You

sounds to me like she's S.O.L. You can't get blood from a stone... so if there's no money or assets available, than there is really nothing that she will be able to collect on if she takes legal action. But it doesn't sound like anything illegal took place, so it doesn't seem like she is entitled to any money, even if there was any.

but i'm no laywer and no expert or authority on these types of matters, so don't take my word for it. maybe other posters will have better news for you.... but it doesn't look good

Sucks to hear, but thanks for the reply plowking.

If a class action law suit happens, she will probably get some profits. If shes a creditor, she will probably recoup some portion of the debt as well. If she bought some sort of preferred stock and is receiving dividends, then she is SOL.

I'm trying to figure out if a class action suit is possible. I don't know if it was some sort of preferred stock but yes she was recieving monthly interest payments on which she was living on.

I spelled the name wrong in the op it's Lydia Cladek fyi and the link also didn't go to page with the most recent comments
http://mylci.wordpress.com/2010/03/0...adge/#comments

Instead of rumors, look it up yourself. You need a PACER account, then search here. Don't go off half cocked on rumors. The watchdog type pages that you linked are really common in cases where individual investors are solicited like your grandmother was. The investigation mentioned could be an investigation by the state attorney general into investment solicitation violations. There are rules for public stock offerings and investment solicitations that need to be followed.

The court will notify all creditors, but the debtor must properly list the creditors otherwise the court does not know that the creditor exists.

Impossible to tell. She should see an attorney right away. There are a lot of rules peculiar to bankruptcy and some have rather short timeframes. For example, the 400k that the company gave to charity might be recoverable. Certain other payments might as well. She needs a lawyer.

Other than the state attorney general investigating the company?

A lot of times what will happen is that a group of investors will hire an attorney to investigate, sharing the costs. If a Chapter 11 bankruptcy is already on filethen the United States Trustee has the power to form an official committee or committees of creditors/shareholders/bondholders who can investigate the company and are paid for by the debtor. The area is specialized, she needs competent counsel. No attorney will work for free for an investor in a company, and if a bankruptcy is on file a class action is not necessary.

Unfortunately, she isn't alone.

Sorry this sucks to hear, but just another example of why all your eggs should not be in the same basket.

http://www.bestlawyers.com/search/default.aspx

Click here and start making phone calls, this is filtered out for lawyers in Florida who have a specialty in corporate bankruptcy/creditor and debtor. Over 50 majors that would give you all the information you could ask for, within reason. There is no use trying to echo the details you know about the potential suit in this fashion, not a good idea, good luck Hawk.

Crash Jr. I cannot thank you enough for spending the time looking over the link and providing me that information.

Thank you also for the advice Mrmusicrecorder.

There has been a flurry of posts on the blog which I linked to.

Without "echoing details" it looks like this could have been a huge scam. I"m finding out there were a lot more people involved than I could have imagined, and I wouldn't be suprised if this pops up in the national media.

I feel foolish for not looking into this some 7 or so years ago when my grandma first told me about it. I remember thinking, sounds good to be true...

Things don't look good but I'm gonna do whatever I can. Thank you for your advice.