I am not a lawyer, but I worked for several years in a company that did equity investment loans. As is part of the business, some of the companies we invested into defaulted on the loans. We spent a lot of time taking these companies and individuals to court. We won some, we lost some, and in the process learnt a lot about how the legal system works.
I suspect that some of the victims of this Kingston Ave merchant might be reading this forum, so I will just say a few things:
1. When it comes to unsecured loans, courts of law operate on a first-come-first-serve basis. It also very much follows the Talmudic logic of כל דאלים גבר. In short, if any of the victims decide to lawyer up and go to court, they will be first in line to collect and seize assets (assuming there are any to seize). Other parties can try to rush to court to intervene and that may or may not be effective.
2. Victims with more money to spare are at a clear advantage. They can hire good lawyers and file a case. If any of these victims sustained more than $75,000 in losses then they can file a case in Federal court and even go as far as to ask for a preliminary injunction and have the merchant’s warehouse and other assets seized. Once this happens, everyone else in line can be screwed.
3. If you are a victim, you must immediately get an exact accounting of the merchant’s assets. You must find out if he has secured loans, because if he does then they are first in line no matter what.
4. As others have mentioned, if he declares bankruptcy, your money will unfortunately not be recovered. Under bankruptcy there is a specific order of who gets paid first, second third etc. first goes the court receiver, then taxes, then wages, then secured lenders, and then if there is anything left, unsecured lenders. There is usually nothing left for unsecured lenders. This is on top of the fact that this process can take several years and the credit card interest might not be sustainable for some victims.
5. Not every lawyer is a good lawyer. Thousands of lawyers graduate every year and many of them are dumb as a doorknob. Try to find a lawyer with experience in this specific field and ask around for references.
6. Don’t assume that all victims are trying to help each other out. At the end of the day everyone is going to look out for their own skin. This sounds morbid, but some of the bigger, friendlier victims can hammer out a private deal with the merchant that will leave the smaller guys in the dirt.
Again, if you are a victim you must independently find out exactly what the merchant has. He could have squandered this money on something and his assets could be a quarter of what he took.
If everyone recovers their money from this it will be a miracle.
Do not rely on anything I wrote here. Consult with a competent lawyer.