[brudgers]

My random advice from the internet, is to make your decisions premised on never seeing the money.

1. The COO did not treat paying you as a priority.

2. The COO normalized non-payment by stating they had not been paid.

3. The company is not even offering pennies on the dollar.

4. The investor has pulled out.

Roughly, your options come down to luck.

1. Maybe the company gets money and decides to pay you and everyone else for work done instead of using the money to grow the company or pay themselves.

2. Maybe the company gets money and you and everyone else who they owe money can sue them and win and the money spent on attorneys turns out to be well spent.

3. Maybe the company files bankruptcy and you pay an attorney to represent you and their is a pile of money so large that even unsecured creditors get paid.

4. Maybe you hire an attorney and successfully litigate a claim and the company has no money.

5. The most likely situation is that the company goes bankruptcy and you never see money no matter what you do. It's the one to plan for.

6. Just move on and find paying work and consider requiring a retainer or other method of billing where non-payment does not hurt so badly.

Good luck.

[amorphid]

I had a deadbeat client who owed me about $10K. What I really wanted to do was sue, make his life miserable, call his investors, etc. But in the end, I just walked away. He'd burned through all of his money, and I didn't actually hate the guy. And I'd be happy to work with him again, if he pays in advance. :)

Life is too short to get hung up on small hiccups.

[Iv]

I had a deadbeat client in Japan. I did want to walk away but my Japanese wife did not. She declared that unacceptable from a Japanese company. The procedure was surprisingly straightforward. When the person refused to come to trial, we were authorized to walk in with a legal specialist to seize down assets, only to find out that the guy had just been evicted by his landlord and all the physical assets already seized.

[throwawayz]

funny my wife offered to do the exact same thing almost and call him at home ( found the # online! ) and really lay it on him how he's stealing food from our kid's mouth.

[amorphid]

If I had a crusading wife, there's no way I'd get between her and someone who owed money to the family's primary source of income. :)

That being said, for me it doesn't make a lot of sense to sue someone without money. That is just throwing more time and money down a hole. It was more productive to learn from the experience, adjust client engagement process to reduce the chance it'd happen again, and move on.

[abrookewood]

There's a lot to be said for this approach - chasing hard for small amounts of money can do terrible things to your mental state.

[bbulkow]

Interestingly, for some people, letting go of the money without a fight is psychologically wrecking as well. It can eat away at you, make you question yourself.

The question in my mind is what kind of person are you, or if you have someone in your circle ( like the wife in question ), and have them do the chasing, just for their own well being. I like that option here - not knowing you or your wife, so maybe I am all wrong - because then she won't be carping after you.

[amorphid]

In the learning to let go department, if you have a hard time letting go, I think it is totally worth trying to get the money. Eventually you get it, or become so exhausted, you just wanna give up. Then you just reflect on how it went, and get better at deciding how to proceed in the future.

[CodeWriter23]

Brudgers is spot on, and #5 is the most likely outcome. If their rich guy investor has cold feet, it's probably because they're running a shitshow not a company. Or rich guy investor actually doesn't have money.

That said, my additional random internet two cents for the inadvertent consultant turned banker for his/her client:

Do not do another thing for them until they pay. You can make it nice, couch it in terms of "my employees and I can't eat, fuel our cars and feed our children with promises. Let us know when the money comes through." And say it in a much nicer way than I just wrote.

If you have any materials including source code commits, deliver them on request. Holding things hostage gives them a leg to stand on should you need to go to court, or could be cause for them to sue you. "We withheld payment because they didn't deliver the code". You've got nothing to lose by delivering their materials. Get receipts or written acknowledgements of anything you return, with a time and date on them. Send your own acknowledgement email of the receipt so they can't claim the receipt is forged.

Then you might consider filing a case which they probably won't fight. You can maybe just sue for $5000 in small claims, I know $.20 on the dollar sucks but it's sucks less than $0. But you can file and obtain a lien for less than $200 in small claims. You're probably looking at dropping $7500-$10000 in retainer for an attorney to sue for entire bad debt, but your resulting lien would be worth $25K + fees. Once you have the lien, you can look at selling it to a debt collection agency for probably $.30 on the dollar. They might actually still have some money and will pay you to get rid of the lien, as this will certainly scare off any investors during due diligence.

And here's the non-two cents, sage advice:

You've been a consultant for 10 years. It's time to start acting like a grown up business man or woman.

Always work from a contract. If the client says bullshit like "We want to keep this friendly", remember that contracts preserve relationships. Walk away from clients that want to work on a handshake, any reasonable businessman or woman does the same and understands why you want a contract, and won't begrudge it. The begrudgers are amateurs at best and con artists at worst. Doesn't matter because either way, they will drag you down with them.

The contract probably won't be worth enforcing, but it will proactively create the understanding about why you walked away and make the exit easier for you to deal with. And it will likely keep you from getting sued or protect you in case some loser gets the idea that suing you is their payday. And just remember, IT'S BUSINESS. It's not personal. You can still maintain a friendly relationship or even a friendship with clients while working under contract. My experience is I commanded more respect after requiring contracts, even with existing clients. It's like I leveled up 3 or 4 levels, just by hammering out a two-pager and making them sign it.

Once you have the contract, enforce it. I usually structure mine into thirds, one third up front, one third at the halfway point, and one third upon completion. Works really well for fixed-rate contracts. If you're billing hours instead of fixed rate, work on a retainer. And stop work per the contract if they don't refill the retainer in a timely fashion. Again, time to grow up. You don't really want to be Bank of the Unfortunately Indigent, Inc. do you?

IF you have a particular affection for a project or client, THEN you can grant some forbearance in terms of they pay half of the weekly billing every week or you're out. This is more gambler than banker, lol. You decide up front, you're willing to walk away without getting paid the rest. Cash flow problems are a reality many businesses face, and being a resource in a time of need is a bonding process and can create priceless goodwill. Gamble wisely...

[throwawayz]

i sent them emails just the way you explained. They are a shitshow who just burned through their $ on fancy NYC lunches with potential clients.

So I just spoke to my old lawyer buddy this morning.. basically for $25k it is borderline not worth it...and honestly i cant take my eye off the ball now - as we need to quickly find new projects.

re: contract we have one in place. it has a clause for IP ownership based on full payment..and we've stopped work a while ago.

i will send them a final followup email reminding them of the IP ownership terms and that they currently have in their hands ( ie their github acccnt ) OUR property.

[CodeWriter23]

Sorry you're taking a tough lesson here. Adversity provides us with tools for navigating the future.