Will filing business bankruptcy protect owners from liabilityfor a personal injury lawsuit?

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Will filing business bankruptcy protect owners from liabilityfor a personal injury lawsuit?

Approximately 4 months ago our landlord notified us that a patron at the nearby movies slipped/fell on a fryer oil spill in the movies outdoor box office courtyard about 500 ft from our restaurant. The Plaza manager said their cameras show one of our staff taking out the fryer oil after closing and bumping the cart into the corner of an automated ticket teller. We had no further details or info until today when we got a letter from a lawyer requesting our insurance info to avoid a personal lawsuit. We are an S-corp and have no business insurance due to operating losses and just started a buyout to rebrand.

Asked on June 18, 2011 under Personal Injury, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If your business is a corporation--a sub-chapter S corp--then you would already be protected from business liability, including tort liability; if a business is sued, the owners may not be personally sued unless they personally caused the tort (e.g. if you were the one who slopped oil out there, you could be sued for your actions; but you should not be sued if your business is liable because of the acts of an employe). And if you personally caused or contributed to the tort, then the business filing for bankruptcy would not help you--it would not affect your personal liability.

You should consult with a lawyer about this situation; from what you write, it would seem that there is no basis for personal liability against you (they could try suing you, but you should be able to dismiss the personal suit quickly), but you should get an opinion from someone who can evaluate all the circumstances in depth.


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