What to do if my business is closing and my company owes a vendor $19,000?

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What to do if my business is closing and my company owes a vendor $19,000?

I own a business that is about to close and I owe one of my vendors $19,000. The business is an S-corp. The vendor is out of state. The money owed is for inventory which I no longer have. What are the possible likely outcomes if I stop paying the vendor?

Asked on April 7, 2012 under Business Law, Pennsylvania

Answers:

Glenn M. Lyon, Esq. / MacGregor Lyon, LLC.

Answered 9 years ago | Contributor

If the company owes the debt, you cannot legally dissolve the company without most likely assuming the debt personally. If the company has no assets and the debt is truly only that of the company, some business owners simply cease operations without dissolving and allow the creditor to get a judgment against the company. Otherwise, you will have to file for corporate bankruptcy protection to properly dissolve.

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If your business will be closing business for good and it is an S corporation owing a particular vendor $19,000 which presumably the business does not have the money to pay, I suggest that you consult with a business attorney about filing for a dissoultion of the entity and/or a possible bankruptcy filing to insulate you against a possible claim for the $19,000 personally.


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