What is an officer’s liability regarding a bankrupt corporation?

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What is an officer’s liability regarding a bankrupt corporation?

I am vice-president of a business (C corp) that is nearly bankrupt. There are 2 shares of stock valued at $50 each. I have 1 share and my brother-in-law the other. He is president; I am vice-president. We’re behind on all bills, except for an SBA loan. What would happen to me if I removed myself as officer (vice-president)?

Asked on May 31, 2011 under Business Law, West Virginia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Generally speaking, a corporate employee or officer is NOT responsible for the debts or obligations of the corporation. There are a few exceptions:

1) Anything which you personally  guaranteed;

2) A "corporate" credit card issue in your name--the credit card issuer can go after anyone named on the account

3) Certain tax obligations, IF you were the (or one of the) responsible officers for that kind of tax; e.g. payroll tax obligations

4) Certain employee compensation (e.g. wage) debts or violations, where officers can be sued personally

5) Tort debts (e.g. accidents) arising out of negligence personally done by that officer (e.g. you were the driver of a company vehicle which hit someone)

To double check your potential personal liability, take all the debts and their documentation with you to consult with an attorney (e.g. bankruptcy attorney) who can evaluate your specific obligations. Remember: the general rule is that you are not liable as a corporate officer (or shareholder) and the exceptions are just that--exceptions.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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