Legal Question in Business Law in Michigan

going out of business

I am one of three partners of an S Corp in Michigan. We are having financial problems and are closing doors. What happens with the debt of the company? Is it split three ways? What about the expenses I've paid out of pocket? How can I get my partners to chip in? My partner is trying to get me to pay 1/3 of his attorney fees, the attorney actually

sent me a bill to my home. Am I liable for that? What about expenses he's paid out of his pocket. And my other partner has hired an attorney to personally sue me for mis-management as the President of the company.....he was a silent partner. Help.

Asked on 12/06/06, 10:36 am

2 Answers from Attorneys

Don Darnell Darnell & Lulgjuraj, P.C.
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Re: going out of business

Regarding the debt of the company, it depends upon whether the three of you personally garuanteed any debt. If you did, you might be liable for said debt. If not, notwithstanding any inappropriate conduct of any principals, the creditors are left with only the company to sue. However, if your company is in construction, different rules apply, and some debts from suppliers and subs might stick to one or all of you. Regarding mismanagement, this is an uphill battle for your silient partner, but that doesn't mean that he won't sue you any way.

You should consult with an attorney as soon as possible, to avoid saying or doing the wrong things, which might hurt you later in litigation.

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Answered on 12/06/06, 10:56 am
Matthew Frank Frank & Frank, P.C.
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Re: going out of business

You definetely should consult with an attorney as soon as possible. There could also be potential personal liability for taxes.

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Answered on 12/06/06, 11:44 am

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