How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Irwin Law Your Own Question
Irwin Law
Irwin Law, Attorney
Category: Bankruptcy Law
Satisfied Customers: 6849
Experience:  Lawyer & Real Estate Broker, 30+ years, foreclosure, land contracts, inheritance, probate.
18215332
Type Your Bankruptcy Law Question Here...
Irwin Law is online now
A new question is answered every 9 seconds

Specific Legal Question: We are being sued product we sold

Customer Question

Specific Legal Question: We are being sued for a product we sold and client wasn't happyand wanted their money back (Approx. $15,000 deal). We couldn't reach an agreement and they are now sueing. We can't afford to pay the legal fees and want to close the company (Delaware LLC), What's the process and costs taking into account we don't have any assets?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Irwin Law replied 1 year ago.

Generally speaking, an LLC can be dissolved under State (DE) law just like a corporation. These Nolo instructions are usually accurate: http://www.nolo.com/legal-encyclopedia/how-dissolve-llc-delaware.html. With no assets, the winding down process should be simple and can be done without an attorney. Some will simply walk away from an LLC with no assets; however since you are in litigation, you should follow the formal dissolution procedures in order to avoid the creditor trying to go behind the LLC to you and other members personally. Also, be sure that other LLC records, such as authorizations, minutes (if any) are brought up to date. I suggest having a business attorney review your operations and its' records. I hope that this information is helpful and that you will assign a positive rating, which does not increase you cost here.

Customer: replied 1 year ago.
Hi Irwin,
The link provided doesn't work."be sure that other LLC records, such as authorizations, minutes (if any) are brought up to date"
Could you provide more information about that?"creditor trying to go behind the LLC to you and other members personally"
How can they do this?Also I've asked if there would be any trouble for owners to open new LLC in the future ?
Expert:  Irwin Law replied 1 year ago.

Try this by pasting it in your address bar: http://www.nolo.com/legal-encyclopedia/how-dissolve-llc-delaware.html OR, just Google - Dissolve Delaware LLC. It should be the first entry.

There are formalities in which LLC records need to be kept in order to distinguish that business from personal business. There may be resolutions and authorizations that should be as part of the business records for the LLC. If legal formalities are ignored , a court may disregard the LLC protections and hold members personally responsible. This is a very complex legal issue Referred to as "piercing the corporate veil" should you care to research it yourself. It cannot be dealt with in this question-and-answer format. You should have no problem opening a new LLC in the future. I would not try to move assets from the old LLC into a new one though. Fortunately, the amount of the debt in your case is relatively small. Hopefully, the creditor will not wish to spend much trying to pursue extreme and expensive collection tactics.

Customer: replied 1 year ago.
Could I handle this kind of process by myself or how much would it SHOULD cost...
Could you suggest cheap solution to help me handle this issue ? Perhaps a law student / intern ..
Expert:  Irwin Law replied 1 year ago.

I don't know what you have or have not done with your business. A lawyer will have to review your business transaction that you have had to see how you have documented your LLC status with regard to such transactions. This is not an easy subject.

Customer: replied 1 year ago.
Hello.
So I don't understand the answer, I need to know how to dissolve this the cheapest way possible and how much is cheap .. If I can't get an answer for this kindly open my question to others
thanks
Expert:  Irwin Law replied 1 year ago.

You can file the Certificate of Cancellation of the LLC on your own. The total cost is a $200 filing fee. Here is the explanation of the process: http://www.northwestregisteredagent.com/dissolve-delaware-LLC.html

Here is a letter of explanation and the form to file. It is as simple as it can be.

http://www.corp.delaware.gov/webllc-can09.pdf

I hope this is helpful.

Customer: replied 1 year ago.
This is where I am not clear:
Can I dissolve the company while I am in litigation (we have mediation in 1 month) ?
And Would there be trouble for the company or owners. .
Expert:  Irwin Law replied 1 year ago.

Good morning. You are now branching into different areas without having accepted any of my prior answers. If I am to continue trying to assist you here, I believe that you should enter a positive rating for prior answers at this point.

Customer: replied 1 year ago.
Hello Irwin,
My question is basically simply:How to walk away (and how) without getting into trouble in a case like mentioned above.
Unfortunately I am unclear at this point, therefore I can't accept the answer.
Expert:  Irwin Law replied 1 year ago.

Basically, you hope that the creditor goes away (i.e. writes off the loss) when they learn that your business is insolvent and is being shut down. That will become obvious to them when you don't hire an attorney to defend the lawsuit, and they find no company assets to seize. Can they sue you personally and try to go behind your LLC protection? Yes, they sure can, even for a small debt like $15k. Will you win the case. I have no idea because I can't analyze your past business practices from here. It depends on how well you have followed the LLC statutes in what you have done. Formally canceling the LLC is one element of that, and may be done at anytime i.e. before or after the judgment doesn't make any difference.

Customer: replied 1 year ago.
Once I fire my current attorney and don't hire a new one,they would probably get a judgment in favor of the plaintiff.
if I close the LLC before or after the judgment is made they can persue the matter personally ?
How come? This is a business matter and the company is reliable for financial losses not the owner personally..
I am not clear with that..Is there many cases this happens and the owner needs to pay personally ?I have this company for 2 years, this is first time we have this situation. I decide to walk away as the company is not earning a lot of money and this would break me..
Customer: replied 1 year ago.
Let me be more clear.1. We're going to fire current lawyer
2. Start dissolving the LLC
3. we're going to have a judgment against us, making us pay $15000 to the plaintiffs.
4. They will not be able to recover the sum and will find out they company has been closed.
5. They will seize our bank account which has approx $500.
6. They will than may or may not choose to chase the owners personally .Important doubts:
* What's the usual cost to dissolve LLC, (i understand approx $200 - is that right) ?
* What's the cases where they can actually have measures against the owners and what are the chances they can get something against me or my partner financialy or legally cause trouble?
* Will they be able to persue our next assests or ventures (i.e new company assets?)
Expert:  Irwin Law replied 1 year ago.

I will only answer this question if you accept the offer for additional service. If the company has $500 in the bank, you can well afford it. If you do not accept the offer for additional service, then I will opt out of this question.

Customer: replied 1 year ago.
Hi
Is this is the cost for dissolving the LLC? An Advice or what is it exactly ?
Expert:  Irwin Law replied 1 year ago.

That will be the cost of the phone call consultation with me. The $200 fee that the form requires is paid to the state of Delaware. What you were quoted is a discounted rate exclusively for JUST ANSWER customers.

Customer: replied 1 year ago.
Hi,
I am still confused how we could dissolve a company which is in litigation without getting into trouble...
Expert:  Irwin Law replied 1 year ago.

I don't understand how you can be confused. Everything you need to know is somewhere in one of my eight prior Answers, none of which you have rated positive, which would cost you nothing extra.

I gave you a very good Additional Services offer, which you haven't accepted. As soon as you do, we'll move ahead. Also, I am presuming that English is your primary language.

Customer: replied 1 year ago.
Hi Irwin,
I need to get a definite answer which can give me a direction on how to move on.
I don't expect just answer to resolve my problem, but I expect it to give me a definite answer.My attorney in DE says thay once in litigation, a company can't (or is not suppose to) dissolve.. a bankruptcy need to be filed (which is more complex and expensive)So that's where I'm stuck right now.
+ the whole personal liability issue which I don't get it when they will chase me personally and when they will let it go..
Expert:  Irwin Law replied 1 year ago.

the whole personal liability issue which I don't get it when they will chase me personally and when they will let it go.

How would I know that? I need many more facts in order to give you even an educated guess. I have to delve more deeply into you business operation procedures, and that requires a personal conference. I can't spend any more time on this here in this Q&A format. Neither will anyone else, because as you said yourself, you just don't get it.

Customer: replied 1 year ago.
I am not interested in paying additional $150 for an advice.
If you can't assist further, open my question to another expert.Thanks,
Expert:  Irwin Law replied 1 year ago.

That's too bad, because I could tell you everything you need to know in a 20-30 minute phone call. I will opt out at this point and wish you the best of luck,

Customer: replied 1 year ago.
Hi Irwin,
Either way I would need to dissolve or declare bankruptcy, by what you said before - and by what I have from other attorneys. both ways require me to pay for fillings..
So I don't see how paying $150 for a consultation solves my problem .If I got it wrong, tell me..
Expert:  Irwin Law replied 1 year ago.

So I don't see how paying $150 for a consultation solves my problem.

And you won't until I speak with you. And I won't speak with you until you accept additional services.

This is not a free service.!!

Customer: replied 1 year ago.
Please open my question to another expert.
I am not interested in additional services. My question is very straight forward and clear.thansks/
Expert:  Irwin Law replied 1 year ago.

It has been open to all since yesterday morning.

Related Bankruptcy Law Questions