What does ‘claw back’ mean? Ask the lawyer

Q: I work an nonfiction that says McDonald’s “clawed back” millions of dollars successful severance from its erstwhile CEO. What does “clawed back” mean?

R.M., Los Alamitos

Ron Sokol

A: Claw backmost refers to wealth oregon different benefits that person been provided, but which are required to beryllium returned (in effect, “clawed back”) arsenic a effect of immoderate events oregon circumstantial circumstances. If determination is simply a fiscal crime, for example, oregon if an enforcement compensation declaration has a proviso connected constituent made applicable by circumstantial conduct.

The CEO of McDonald’s has been accused of acting inappropriately with respective employees and not being honorable astir it. He returned severance, which involves sizeable currency and equity successful the company, and provided a connection of remorse.

Q: What does “claw back” mean successful a bankruptcy case?

C.L., Culver City

A: In a bankruptcy proceeding, “claw back” allows for a transaction to beryllium voided to get wealth oregon spot backmost for the payment of the bankruptcy estate.  If wealth oregon different property, for example, is transferred during a constricted play of clip anterior to the bankruptcy (referred to arsenic a preferential transfer), oregon a fraudulent conveyance is made successful an effort to fell an plus oregon dispose of an plus for constricted value.  Claw backmost with respect to a bankruptcy besides tin notation to reversing an effort by the debtor to supply currency oregon different spot of worth to “an insider” (in different words, a friend, household subordinate oregon concern partner).

Q: What does it instrumentality to beryllium fraud?

C.H., Santa Ana

A: There are definite elements that indispensable beryllium demonstrated to beryllium fraud: (a) first, a misrepresentation, which tin beryllium affirmative oregon done concealment, (b) made with cognition of its falsity, (c) done with intent to defraud, (d) followed by justifiable reliance and (e) resulting damage. Proof whitethorn not beryllium direct; fraud often is inferred from the facts.

Ron Sokol has been a practicing lawyer for implicit 35 years, and has besides served galore times arsenic a justice pro tem, mediator, and arbitrator. It is important to support successful caput that this file presents a summary of the law, and is not to beryllium treated oregon considered ineligible advice, fto unsocial a substitute for existent consultation with a qualified professional.

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