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Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 27264
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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i have a sue agaist my s corporation if i close my s corporation

Resolved Question:

i have a sue agaist my s corporation if i close my s corporation whats next
Submitted: 1 year ago.
Category: Business Law
Expert:  Roger replied 1 year ago.

Roger :

Hi - my name is XXXXX XXXXX I'm a Business litigation attorney. Thanks for your question. I'll be glad to assist.

Customer:

hi thank u for your respond

Roger :

Closing to corporation will not stop the lawsuit because the matter being sued over occurred while it was in business. Also, if you were to try and liquidate the assets of the company to claim that the corporation was worthless, the plaintiff could sue you under the fraudulent transfer act and get a court order requiring the company to recover its assets so they could be liquidated in the event of a judgment.

Roger :

So, it's generally not a good idea to close the corporation and liquidate once you've been put on notice of being sued.

Roger :

Hopefully, your business has insurance coverage available for the issue, and you can turn the claim over to your insurer.

Customer:

so what will u recomend me to do , since is a s corporation

Roger :

Do you have insurance coverage?

Customer:

no

Roger :

Ok. The best thing to do would be to consult a local attorney to file an answer on behalf of the corp. and then try to reach a settlement if at all possible.

Customer:

what if i do a bankrutucy

Roger :

Settlements are usually the cheapest way to resolve claims because it avoids protracted litigation, which can cost thousands.

Roger :

IF the corp. files bankruptcy, then the liability for this claim can be discharged as an unsecured debt SO LONG AS the claims are not for fraud.

Roger :

If your corp. has been sued for fraud, then a judgment based on that cannot be discharged through bankruptcy.

Roger :

In this case, if the corp. has little assets (or assets you're willing to lose), then it certainly could dissolve through bankruptcy and the claim/lawsuit would be discharged like any other debt.

Customer:

no it was a job but costumer was not satisfied and the she wants money back .

Roger :

Ok. In that event, if you were to file bankruptcy, then this customer would be considered an unsecured creditor, and the claim should be discharged as any other unsecured debt.

Customer:

ok , so you recomend me close the corporation first and them file for bankruptcy them ?

Roger :

You probably should file bankruptcy and allow the filing to be the operative action that sparks the dissolution of the business.

Customer:

explain me about the allow the filling to the operative action

Customer:

sparks?

Roger :

Most LLC operating agreements or state statutes say that administrative dissolution begins if a corp files bankruptcy.

Roger :

Thus, if you file bankruptcy for your corp, the bankruptcy process will function as the liquidation process for your corp.

Customer:

what that means

Roger :

"sparks" = begins the liquidation/dissolution process

Customer:

sorry but am not so familiar with all this laws stuff

Roger :

No problem. Didn't mean to be confusing.

Customer:

all i want to know if i close this corporation and file them for bankrutsy i will be able to start all over a new company clean and with my head more profecional to start fresh from cero

Customer:

and i wont have to know if i will have to prove income or answer interrogations to the lawyer since i already have a judgement agaist my company and my name

Roger :

Yes, you should.

Roger :

If the corp files bankruptcy, a new company should be able to start up fresh without this judgment being an issue as it will be discharged.

Customer:

ok thank u

Roger :

Sure. No problem.

Customer:

so i will have to file to close the corporation or i dont need it

Roger :

You should have to file a notice of dissolution with the secretary of state to inform it that the corp. is dissolved, but the bankruptcy likely should be started before doing anything else.

Customer:

before file for disolution?

Roger :

Yes.

Customer:

ok thank u very much..

Roger :

No problem!

Roger, Attorney
Category: Business Law
Satisfied Customers: 27264
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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