May My C Corp break a commercial lease that does not have a personal guarantee due to business loss?

My C Corp has a capital loss. If it continues to do business that
loss will grow due to unavailable supply. The CCorp has a 3 year
commercial lease that does not have a personal guarantee. I tried
to offer assets to the landlord but he is playing hardball. If the
Corp closes will I be personally liable? Will the Corp?

Asked on March 25, 2018 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

1) If you signed the lease in your personal capacity or as yourself (and not as, say, "President of C-Corp."), you would be personally liable.
2) If you signed the lease on behalf of the corporation, so that the corporation is the tenant, then the corporation is liable: if it breaks the lease, it will remain liable for all rent due under it for the remaining length of the lease. 
3) Generally, if the corporation is the tenant, then the corporation's owner(s) and officer(s) are NOT liable for the corporation's debts or obligations--that's the whole point of a corporation, to protect its owners and managers from liability.
4) However, IF you have not respected the corporation's independent existence--for example, you comingle corporate and personal money; you use corporate funds to pay personal debts or expenses--it may be possible to "pierce the corporate veil," bypass the corporate protection and hold you liable. This rarely done or successfully, but is possible if you treated the corporation as an extension of yourself instead of as a separate entity with it's own interests and existence.


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