What to do about potential personal exposure regarding a lawsuit against a corporation that I own?

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

What to do about potential personal exposure regarding a lawsuit against a corporation that I own?

We have a corporation that has not been operating for over 1 1/2 years. The company is essentially defunct and there is no money or revenues as it is no longer currently operaing. We cannot afford at this time to have an accountant get the corporate taxes current so we can’t dissolve or bankrupt the company officially. Our standing with the state is terminated according to the state website. A creditor is trying to sue the company and me personally as an owner for $250k. It was unsecured credit a fuel provider with no personal guarantees. Do I have any exposure personally?

Asked on April 13, 2012 under Business Law, Virginia

Answers:

Madan Ahluwalia / Ahluwalia Law P. C.

Answered 10 years ago | Contributor

No, you don't except if you conducted the corporation without proper records or did not main separation between personal transactions and conduct from corporate ownership or commingled company's funds, etc. 

Concept of "piercing the corporate veil" has to be exercised to hold you liable in the lawsuit by the creditor. It is difficult route to go and cumbersome to prove. The phrase piercing the corporate veil is used to describe the action of a court to hold corporate shareholders personally liable for the debts and liabilities of a corporation.

As long as you conducted corporate business separately and maintained proper records, you should not have a problem.

If creditor sues, you can file a motion to dismiss lawsuit against you for the reason that debt was  against the company. 

It might be worthwhile to find a way to formally dissolve the company to effectively make the $250K debt and related problmes go away. Find a way and buy your peace of mind, my friend.


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.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption