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  1. #1
    Join Date
    Mar 2010
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    1

    Default Can a Creditor Collect from a Different Corp

    My question involves business law in the state of: New York

    Last year (09) I was the sole shareholder of an S-Corp. A major Client of said S -Corp defaulted on $55,000 in invoices owed the company during 08. This left the S-Corp. with a stack of vendor bills for goods we had delivered without payment to said Client, based on their former stellar payment history. The S-Corp. did not sue the Client. The Client promised payment and the S-Corp. gave them time. In February of 09 I had a baby and so was pulled away from the day to day of the S-Corp. for a few months. The S-Corp. never received payment from the Client and eventually they went out of business. I was able to negotiate settlements on behalf of the S-Corp. with most of the vendors I had relationships with. I believed I would be able to either salvage the company or at least dissolve the corporation with no outstanding debts. However an employee had ordered goods from one vendor with whom I had no relationship. I understood from the employee that there were some mistakes with regard to the invoices from this vendor - that we were overcharged based on the signed estimate. We disputed the charges but in the end this vendor sued. The S-Corp. received a judgement in the mail against the company, however the S-Corp. had never been apprised of a court date. At this point we got a lawyer involved. The lawyer was able to get the judgement vacated (apparently the vendor had served a different company with a similar name). The court date was rescheduled for June 2010.

    I have 2 questions:
    1) I want to dissolve the S-Corp. but I'm not sure if I can with this case still pending. The S-Corp. has no assets and no bank account. It ceased paying employees at the end of 08 and stopped operating in June of 09. I don't want to continue filing tax returns on behalf of the company.

    2) I have recently become an officer in a new corporation. Can the creditor legally try to collect from this new company or are there laws preventing that? The new company has nothing to do with the old company with the exception of the business address.

  2. #2
    Join Date
    Mar 2008
    Posts
    1,995

    Default Re: Can a Creditor Collect from a Different Corp

    Quote Quoting brooklynite
    View Post
    My question involves business law in the state of: New York

    Last year (09) I was the sole shareholder of an S-Corp. A major Client of said S -Corp defaulted on $55,000 in invoices owed the company during 08. This left the S-Corp. with a stack of vendor bills for goods we had delivered without payment to said Client, based on their former stellar payment history. The S-Corp. did not sue the Client. The Client promised payment and the S-Corp. gave them time. In February of 09 I had a baby and so was pulled away from the day to day of the S-Corp. for a few months. The S-Corp. never received payment from the Client and eventually they went out of business. I was able to negotiate settlements on behalf of the S-Corp. with most of the vendors I had relationships with. I believed I would be able to either salvage the company or at least dissolve the corporation with no outstanding debts. However an employee had ordered goods from one vendor with whom I had no relationship. I understood from the employee that there were some mistakes with regard to the invoices from this vendor - that we were overcharged based on the signed estimate. We disputed the charges but in the end this vendor sued. The S-Corp. received a judgement in the mail against the company, however the S-Corp. had never been apprised of a court date. At this point we got a lawyer involved. The lawyer was able to get the judgement vacated (apparently the vendor had served a different company with a similar name). The court date was rescheduled for June 2010.

    I have 2 questions:
    1) I want to dissolve the S-Corp. but I'm not sure if I can with this case still pending. The S-Corp. has no assets and no bank account. It ceased paying employees at the end of 08 and stopped operating in June of 09. I don't want to continue filing tax returns on behalf of the company.

    2) I have recently become an officer in a new corporation. Can the creditor legally try to collect from this new company or are there laws preventing that? The new company has nothing to do with the old company with the exception of the business address.
    I'm in NY, I had a business, where I sold it, and at the end, there was a notice from an attorney to the effect they plan to sue. It was an accident we had.

    I went through the issues with my attorney and was advised NOT to dissolve the corp., under the circumstances, or creditors can come after the officers. According to him, with the corp., all the creditor can do is have a judgment against the now "defunct corp.", unless the creditor can prove fraud, and also come after the officers personally.

    Now, we did the final tax returns for the IRS, and NY State, so from that standpoint, everything was finalized.

    I don't see a case of fraud here.

    Yes, the creditor can ask for a "debtors exam", if they manage a judgement and you don't pay. but all you can submit at this point are assets totalling "zero", no bank accounts, etc. If it comes to that though, they might want to see a "final accounting" of the books, and it seems doubtful that you walked away with loads of company assets, as you barely made it through.

    Also, the new corp cannot be sued. As I said, they can come after you personally, if they choose to, on the grounds of fraud.

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