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If a company has threatened my company with a lawsuit for over

$50,000.00, and the company has...
If a company has threatened my company with a lawsuit for over $50,000.00, and the company has no money in the account, and has not generated a dollar in revenue and is current with secretary of state, what happens when we go to court since the company cannot pay them anything? AM I at all liable since I signed the contract ON BEHALF OF THE COMPANY? Please answer
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Answered in 8 minutes by:
7/16/2013
Barrister
Barrister, Attorney
Category: Legal
Satisfied Customers: 38,661
Experience: 17 yrs practice, Civil, Criminal, Domestic, Realtor, Landlord 26 yrs
Verified
Hello and thank you for using JA! My goal is to provide you with excellent service and help with your legal problem.
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AM I at all liable since I signed the contract ON BEHALF OF THE COMPANY? Please answer
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How did you sign the contract?
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Did you sign as an officer of the company (XXXXX XXXXX, President) or did you sign personally?
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Are you the only officer of the company?
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Are there any other owners of the company?
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.
Thanks
Barrister
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Customer reply replied 4 years ago

it said "Signed by for and behalf of WallCelebrity: Then I signed my name to the right.


 


Their legal counsel also did the same with their persons name, no title.


 


Yes I am the only officer

Customer reply replied 4 years ago

What is my best defense here?

Ok, if you signed on behalf of the company, then they should only be able to come after the company in the event of a breach of contract. If they sued the company and got a judgment, but there are no assets for them to collect against, they would just have an uncollectible judgment against the company.
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The problem would arise if they tried to "pierce the corporate veil" and hold you personally liable. This can occur if the court finds that a company is just a sham company and it is really the individual acting behind the facade of the company. This is called the "alter ego" claim in the law. If the company doesn't observe any of the formalities of a corporation, such as having Board meetings, recording minutes and keeping assets separate from personal assets, the court can find that the company was just a shell and hold the owner liable personally.
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Thanks.

Barrister

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If you need further help, just reply to me via the “REPLY” button and I will be happy to continue.

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I cannot enter into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. The information provided is not a substitute for a local attorney’s legal advice.

Barrister
Barrister, Attorney
Category: Legal
Satisfied Customers: 38,661
Experience: 17 yrs practice, Civil, Criminal, Domestic, Realtor, Landlord 26 yrs
Verified
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Customer reply replied 4 years ago

Thank you that makes sense. Assuming the attorney doesnt understand the situation, how long does this type of litigation typically take?


What should I do in response if I dont have funds to go to court, hire a lawyer, etc. I would dissolve the business but isn't that the only shield I have right now?

Assuming the attorney doesnt understand the situation, how long does this type of litigation typically take?
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If you actually oppose the lawsuit, then it will likely be a year or more. If you didn't, then they would be able to get a default judgment if they sued and you are looking at more like 45-60 days.
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If you don't have the money to fight, then they will get a default judgment. You couldn't dissolve the company because in order to do so, you have to certify that you don't have any pending legal actions against you. That prevents companies from just dissolving when they get sued.
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But if they get a judgment, the company could file a corporate bankruptcy to discharge the debt and then dissolve.
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Thanks
Barrister
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Thanks
Barrister
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Customer reply replied 4 years ago

Thank you for the advice. Can you please suggest what I do given the circumstance? Do I oppose or get a default judgement ?


 


I am dealing with a merchandise company out of new york that is ruthless. It seems to me the best idea would be to get a default judgement, and then file a corporate bankruptcy to discharge the debt and then dissolve? Pls let me know thank you

Unfortunately I can't tell you what to do as that would be legal advice and only a local attorney can give legal advice.
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But if they aren't going to give up, then to me, the most cost effective resolution would be to let them get a judgment and then file BK for the company. Fighting it will cost lots of money up front for an attorney and they may still get a judgment where you would have to file BK then anyway.
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Thanks
Barrister
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Barrister
Barrister
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Category: Legal
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