Legal Question in Business Law in California
Can we collect from the President of Corp that has been suspended?
BACKGROUND: We received a judgement in Superior Court back in 1993. We attempted to pierce the corporate vail but failed. The judge ordered a contructive trust on the account we transfered to the coroporation. After attempting to collect the sole share holder/President filed Chapter 11 bankrupstsy and the plan was confirmed. The corporation has been making payments as listed in the confirmed plan until last year. The corporation is no longer covered under the bankrupsty since the plan only called for 6 years of payments. The State of California suspended the corporation early last year. The sole sharehold/President is still running using the same corporate name and tax payer id. QUESTION: Since the corporation is not in good standing with state are we able to enforce the judgement against the President to collect the money sine the business continues to operate?
Thank for your help!
4 Answers from Attorneys
Re: Can we collect from the President of Corp that has been suspended?
Not an easy question and most likely not an easy task. You'll never know until you try though. Usually attorney's fees pay for themselves if not by judgment, then by settlement. Please call directly at 9619) 222-3504.
Re: Can we collect from the President of Corp that has been suspended?
Your questions raises several potentially complex issues, including the Chapter 11 plan, the underlying claim and judgment, etc. A complete analysis would require a review of the documents and some research. If you are in the area, please contact our office if you wish further consultation.
Re: Can we collect from the President of Corp that has been suspended?
It sounds like you can recover from the corporation. However, there are some issues such as what was ordered in relation to your debt during the chapter 11 reorganization, i.e., was full payment supposed to be made?
You should have a sit-down with an attorney who can discuss all of the details and get down to the nitty gritty of your rights.
I would be happy to discuss your case with you.
J. Caleb Donner
LEGAL WARRIORS (R)
325 E. Hillcrest Drive, Suite 242
Thousand Oaks, CA 91360
805-494-6557
www.donnerlaw.com
Re: Can we collect from the President of Corp that has been suspended?
The answer to your question is made more complex by the murky situation surrounding the bankruptcy and the effect of discharge; also, whether the corporation was in good standing when your cause of action arose may have an effect.
Beyond that, it has not been decided in California whether suspension alone renders the officers and directors of a suspended corporation liable for debts incurred by the corporation while suspended.
Arguably, they can be held personally liable if they knew the corporation had been suspended when the debt was incurred, since exercise of such powers is a criminal act (Rev. & Tax. Code section 25962.1) However, to date there is no appellate decision so holding.
Further, there is no case law holding that directors and officers are personally liable when they did not know of the corporation's suspension, e.g. because notices of suspension were mis-addressed because the corporation failed to file its biennial statement showing its address.
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