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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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Can I close a business with the business in dept without filing

Customer Question

Can I close a business with the business in dept without filing bankruptcy?
Submitted: 7 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 7 years ago.
Thank you for your question.

The answer is "yes", you can, but as the business owner, principal, shareholder (whatever type of business it is), you can possibly be personally held liable for the debts of the business, especially if you never incorporated. Even if incorporated, a possible "piercing the veil" suit may be able to still get to you and to your personal assets. It would be wiser to wind down the business and file for bankruptcy if the business is in severe debt.

Good luck.

Edited by Dimitry Alexander Kaplun on 7/1/2010 at 5:19 PM EST
Customer: replied 7 years ago.
My company is a C Corp.
Expert:  Dimitry K., Esq. replied 7 years ago.
Thank you for your follow-up.

If you are a sole shareholder, and/or you had a personal guaranty on the debts, then you can still be personally pursued by the creditors. It will be harder for them to do so, as you are somewhat protected by your incorporation, but that protection is not 100% guaranteed. If the creditors can convince the judge that you were acting in bad faith, and the C corp is your 'alter ego" (in essence your other identity without real difference between your business facet and your private facet), the judge may permit them to pursue you for the personal assets.

Hope that helps.

Edited by Dimitry Alexander Kaplun on 7/1/2010 at 5:29 PM EST