That's not true - if they were his personal loans then he's liable for such. He can't dump that debt onto the corporation and thereby you.
To, what he would potentially be doing is fraudulent. Now not that he's retiring and collecting unemployment - but dumping the personal debt on the corporation would be.
Till the business is dissolved - it just has to operate without committing fraud.
So, your original question:
I'm 50% shareholder of a S-Corporation that recently closed the doors. The other 50% shareholder is eligible for social security benefits and wants his wife to obtain his title of President and he wants to be Chairmen of the corporation; so he can receive his social security benefits, but the business is closed. Is this legal since the business is closed?
If the By-Laws allow for her to become the President and you don't object - then she can do such.
The business can continue to operate until dissolved. When the business is dissolved - there are special requirments for doing such.
To dissolve a North Carolina corporation it is necessary to file an Articles of Dissolution form with the office of the Secretary of State in Raleigh. The decision to dissolve must be made in a manner compliant with Chapter 55 of the state's general statutes.
Information necessary to complete the Articles of Dissolution form includes: the name of the corporation, the date dissolution was authorized, and the effective date for the dissolution. It is also necessary to include the names, titles, and addresses of the officers of the corporation along with the names and addresses of its directors.
The Articles of Dissolution form for a North Carolina corporation may be downloaded from :