Is the individual held liable or is the company held liable for money owed to a customer?

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Is the individual held liable or is the company held liable for money owed to a customer?

A customer gave money to a company for product then that company filed for dissolution on account of them running out of money. Can the individuals that own said company be held liable to reimburse said customer or are they safe? The company is an S corporation.

Asked on July 5, 2017 under Business Law, Louisiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If the company is a corporation of any kind, including a sub-S (or, for that matter, is an LLC), the owners (i.e. the shareholders) are not personally liable for any amounts owed to a customer  due to the company violating its obligations to the customer (e.g. taking their money, then not shipping them the product). That is the whole point of a corporation: to shield the owners from liability. The customer can sue the (insolvent or now dissolved company only).


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