Legal Question in Business Law in Georgia

Personal liability and S corporation

I owned a wedding videography

business that was set up as an s

corp. We have since fone out of

business and have several projects

that are unfinished. I'd like to return

the raw footage to the clients. Most

of the clients 'paid in full' for their

videos but we are unable to finish

them at this point due to a lack of assets. 1. If they sue the corporation

we'd obviously lose since we failed to

honor the contract. so can I be held

personally liable? 2. Can I be sued


Asked on 12/21/08, 9:59 am

2 Answers from Attorneys

Glenn M. Lyon, Esq. MacGREGOR LYON, LLC, Business Attorneys

Re: Personal liability and S corporation

Generally, liability for the debts and obligations of a corporation do not flow to the owners. However, there are some significant exceptions depending on how the company was run, the type of claims, and other facts. You should have a business attorney to review the situation and any lawsuit, if any.

If you would like to discuss any issues further, please feel free to contact my office. My contact information is below. Thank you.

The foregoing is general information only, not specific legal advice. No attorney/client relation has been created or should be implied.

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Answered on 12/22/08, 9:40 am
Tom McLain AirWatch, LLC

Re: Personal liability and S corporation

With respect to your first question regarding personal liability in connection with a lawsuit against the corporation, the general answer is that a shareholder/officer/director of a corporation is not personally liable for the obligations of the corporation. Nevertheless, in certain situations there may be exceptions to this rule. For example, you may have personally guaranteed an obligation of the corporation. Or, you may have disregarded the corporate formalities to a degree that would allow a plaintiff to "pierce the corporate veil" These sorts of situations are dependent upon the particular facts and it is therefore necessary to consult an attorney.

As to you second question, you can always be sued personally for just about anything. The real question is whether such a lawsuit would be successful. In other words, people can sue you with no real hope of success, so an attorney can never tell you that "you won't be sued." So, the answer to your second question is yes, but your comfort lies in the answer to the first question.

If you wish to discuss anything further, please contact me.

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Answered on 12/22/08, 12:02 pm

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