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cortrightlaw
cortrightlaw, Attorney
Category: Bankruptcy Law
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Experience:  Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
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C corp was in receivership then the court dissolved the corp

Customer Question

C corp was in receivership then the court dissolved the corp and Chap 7 followed. Bankruptcy Trustee declared it was a no asset case and it was closed. Can a stockholder sue the new LLC as a derivative plaintiff and what is the expected result? Is there standing to sue a dissolved corp that filed Chap 7 then case closed as no asset case?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  cortrightlaw replied 2 years ago.

cortrightlaw : Corporations do not receive discharges like individuals, the cases are closed out as no asset cases, so the corporate debt is eliminated and if the corporation is closed then you would have no one to pursue. Unless you can pierce the corporate vail showing that the corporation was not run like a corporation and or that they hid assets and transfered them to the new corporation.
Customer:

The corporation was put in receivership and fired all employees except 2 the same day. About 2 months later the former employees started a new company and then one of the stockholders filed as a derivative plaintiff a lawsuit against the former employees and their new company. How can the stockholder sue or on what basis can he sue as a derivative plaintiff on a dissolved corp that was put into Chap 7 then case closed as a no asset chap 7. What benefit can the corp get if the stockholder were to win?

cortrightlaw, Attorney
Category: Bankruptcy Law
Satisfied Customers: 513
Experience: Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
cortrightlaw and 3 other Bankruptcy Law Specialists are ready to help you
Expert:  cortrightlaw replied 2 years ago.
Your issue / question at this appears to be more of a business litigation question then a bankruptcy question at this point. The reason I say this is that the stockholder was not a party to the bankruptcy in that capacity and the same applies towards the employees and the new corporation. I do not see any bankruptcy principals applying to the civil action. As to the rest of your question I not a business civil litigation attorney so I can not adequately answer that part of the question and I would recommend that you submit a new civil litigation question on that part of the issue.

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