Who is responsible for repayment on a promissory note if an LLC has been involuntarily dissolved?

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Who is responsible for repayment on a promissory note if an LLC has been involuntarily dissolved?

I sold a business a few years ago. I had financed part of the sale of the business and have a lien and promissory not for this but it is a second lien on property the bank has the first. The promissory note is in the buyers LLC and there is no personal guarantee. I was told that I could sue the LLC but not him personally for not making the payments. I have since found out that the LCC was dissolved by the state of Ga for not paying the yearly fees. If the LCC was dissolved by the state can I sue the buyer personally now or is he still protected? If not who is responsible for the payments now?

Asked on January 4, 2012 under Business Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The dissolution of an LLC does not entitle you to sue the owner(s) of the LLC--they would only be liable if (1) they had personally guaranteed the debt; or (2) in the very rare case that you could "pierce the corporate veil" by showing that the LLC was essentially pretextual--a fraudulent way to avoid paying creditors--rather than a "real" LLC or business. (This is VERY difficult to do.) Otherwise, if the LLC dissolves, you have no effective recourse, the same as you would have no recourse if it declared bankruptcy; or stayed in business but had no assets or income to pay; etc.


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