Legal Question in Business Law in Massachusetts
We did a stock sale of our shares to our business partner a few years ago he was unable to make installment payments so we placed a lien on the business now it looks like he is going to walk away from the business which is suffering heavy losses. Will we have any liability from this business. the shares were "sold" to the Corporation and and should have been transferred but the stock certificates where never issued. Our lawyer never took care of this. We have received some minimal payments toward the installment note. But are now worried that we may have some liability from creditors and the IRS.
1 Answer from Attorneys
Generally shareholders are not responsible for the debts of a corporation unless they agree to be obligated. As to the IRS, if you were not an officer of the corporation at the time the tax was incurred, such as withholding, which the IRS can hold an officer liable for not paying to the IRS.
Without reviewing the details of the transaction of what was or was not done, it is impossible to state categorically you will have no liability to the other creditors or the IRS.
If the corporation is forced into bankruptcy, you may be treated as an insider and any payment made to you within 12 months of the bankruptcy may be required to be returned.
I hope this was helpful. I would suggest you contact an attorney and have a quick review of all the documents as well as getting a complete story of the issues involved.
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