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  1. #1
    Join Date
    Dec 2005

    Question Service on a Suspended Corporation

    What is the name of your state?undefinedWhat is the name of your state?
    How is a "SUSPENDED" Corporation served with process and what are the effects of service on such a suspended corp?

  2. #2
    Join Date
    Oct 2005
    Not clear what you're asking.

    Serve it as designated in the claim or Complaint.

    If it's suspended but operating, you serve it as you would any other corporation (See Calif. Code of Civil Procedure sect. 416.10) by serving the registered agent, officer, authorized person or PIC (if it's an AP or person in charge, consider it sub-service and mail as well). If it has dissolved or forfieted its authority, see CCP sect 416.20.

    The effect is that it responds or you request a default judgment. There is case authority that the owner of a suspended-but-operating corporation can also be personally named, as if the entity were a fictitious business name: "John Doe dba Acme, Inc.", but recognize that there may be issues of proof when requesting a default judgment.

  3. #3
    Join Date
    Jun 2000
    Somnambulist University
    Quote Originally Posted by doubler
    How is a "SUSPENDED" Corporation served with process and what are the effects of service on such a suspended corp?
    You make service on the agent, just like normal.
    As for the 'effects'... it depends on what you are trying to do.

    The Secretary of State or Franchise Tax Board may suspend a corporation for failure to comply with state requirements. Whichever agency suspends a corporation will mail it a suspension notice. Thereafter, the corporation is disqualified from exercising its corporate powers, rights and privileges. The suspended corporation becomes incapacitated until it corrects its delinquent status with the agency that disqualified it. In fact, the corporation has all the burdens of corporate existence (such as the continuing obligation to pay applicable taxes on its operations) without any of the benefits. For example, another corporation may reserve or adopt its name (as occurred in the recent Boyer v. Jones case [link to update on Boyer]). The suspended corporation may be unable to answer a lawsuit filed against it, resulting in a default judgment, and it cannot initiate litigation, which may cause it to suffer losses that cannot be remedied. Any contract that it enters into is voidable at the demand of the other party. And, perhaps most salient to its officers and directors, any person who attempts or purports to use any of its corporate privileges is subject to fines and/or imprisonment. The only exceptions to the loss of corporate privileges upon suspension are that the corporation may (1) change its name by amendment to its articles of incorporation, and (2) apply to the Franchise Tax Board for tax-exempt status.

    Last edited by JETX; 12-05-2005 at 08:26 PM.
  4. #4
    Join Date
    Oct 2005
    Ah, yes. The point in JEXTX's response is worth noting too - for the suspended corporation to respond, it must first reinstate.

    OP - you might benefit if you explianed more about what you're doing. To come back from suspension, the subject corporation effects a "revivor" by getting a certificate of revivor from the FTB. The State or the FTB or both can suspend. I don't know the actual numbers, but I've had some experience. My guess is that less than 10% of those suspended by the State effect a revivor and possibly less than 5% of those suspended by the FTB. If there has been an FTB forfeiture, think in terms of less than 1%. For companies suspended by the State, it's a matter of filing delinquent paperwork and paying fees. For those suspended by the FTB, it's a matter of paying delinquent taxes. It's easier to junk the corporation and start a new one. In my experience, that happens more frequently than there are revivors.

    As a practical matter, if you're serving a suspended corporation, it's very likely that you'll get a default judgment. If you know that you're suing a suspended corporation and you hope to get a judgment that you can collect, it's time to start looking for assets now. If the corporation is still operating (and there's a lot of that too), it's appropriate to figure out how you might shorten time to effect recovery. Is your main concern service or recovery?

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