Closed Corp debt charged to new corp?

[sssc]

Oregon
Last year my small business was sued. I personally filed bankruptcy and closed my s-corp. It was dissolved and all of the officers formally resigned. A little while later I opened a new business/s-corp.
A vendor that the old corporation owed money to started contacting my new business about the debt. Since it was a fairly small amount, I let them know that things were really tough, but I would do my best to send them payments on the closed companies debt in hopes to earn their good faith for my new business. They started sending statements in my new corporation's name with the balance owed listed. When I was unable to make a payment in a manner timely to them, they sent me to collections, who contacted an attourney to send me to small claims court.
The original debt was incurred and invoiced to the old corporation, but the name on the account was changed for the newer statements.
Is my new company liable for the old company's debt if the debt occurred before my bankruptcy? My new s-corp. was sent collections after my bankruptcy was final, and after my other corp. was closed.
I honestly was trying to deal with this, and was making payments, but just not on the schedule they demanded. Did my good will hurt my chances being protected from this debt? Can they just assign a new name to a debt legally even if the original invoicing was to a different entity?

Thanks you very much for any information.

[justalayman]

Originally Posted by sssc

Since it was a fairly small amount, I let them know that things were really tough, but I would do my best to send them payments on the closed companies debt in hopes to earn their good faith for my new business. .

sounds like you reaffirmed the debt.

[bigun]

Contact your bk atorney. A voluntary repayment does not equal reaffirmation. The bk code is very clear. You may repay whomever you please post bk but for a debt to be reaffirmed, you must sign a reaffirmation agreement and the agreement must be properly filed with the bk court.
Something similar cost Sears hundreds of millions of dollars in the late 90's.

[url=http://www.ftc.gov/opa/1997/06/sears.shtm]FTC Settlement with Sears, Roebuck[/url]

[justalayman]

this is beyond me in general but OP did state he filed personal BK and the debt was a corp debt. He has now opened a new s corp. My thoughts;

the personal bk did not affect the corp debts. OP closed the corp.

OP affirmed the debt from the old corp (not actually reaffirming because he was not personally liable for them to begin with)

not sure if he affirmed the debts as a personal guarantor or as an officer of the corp but since the billlings are coming in the name of the new corp, I would presume the debt was seen as being affirmed by the corporation and not the OP himself. I believe that would leave the BK out of the situation.


what do ya think bigun? or any of the other accountant type folks?

[davew128]

I think it's beyond idiotic to allow your corporation to fold because of debt, and then form a new corporation that starts paying off its predecessor's debt because the sole shareholder feels some sort of moral obligation. If it was such a moral imperative, why fold the old corp in the first place?

The only experience I have with this is as follows: C corp had an IRS debt of over $500k, physical assets had seized, and their entire A/R levied. Dip**** as he was, it wasn't until the sole shareholder was held personally responsible for $150k that he attempted to deal with the problem (unpaid payroll tax, interest, and penalty). The solution was for him to personally pay the payroll tax portion, close the corporation, kiss his outstanding A/R goodbye, and start up with a new corporation. I asked the Revenue Officer flat out if he had a problem with this and he didn't, so long as the new entity didn't receive any of the old entity's A/R as the IRS still had a legally enforceable debt of $350k against the old entity.

My non-legal take on this is the new corporation still isn't responsible unless the debt is considered reaffirmed and suit is filed trying to pierce the corporate veil claiming an alter-ego.

[sssc]

Originally Posted by davew128

I think it's beyond idiotic to allow your corporation to fold because of debt, and then form a new corporation that starts paying off its predecessor's debt because the sole shareholder feels some sort of moral obligation. If it was such a moral imperative, why fold the old corp in the first place?

The only experience I have with this is as follows: C corp had an IRS debt of over $500k, physical assets had seized, and their entire A/R levied. Dip**** as he was, it wasn't until the sole shareholder was held personally responsible for $150k that he attempted to deal with the problem (unpaid payroll tax, interest, and penalty). The solution was for him to personally pay the payroll tax portion, close the corporation, kiss his outstanding A/R goodbye, and start up with a new corporation. I asked the Revenue Officer flat out if he had a problem with this and he didn't, so long as the new entity didn't receive any of the old entity's A/R as the IRS still had a legally enforceable debt of $350k against the old entity.

My non-legal take on this is the new corporation still isn't responsible unless the debt is considered reaffirmed and suit is filed trying to pierce the corporate veil claiming an alter-ego.

Just to make a few things clear. The s-corporation dissolved because of a lawsuit not debt. The bankruptcy was filed to protect personal assets from the lawsuit. The new corporation was started after the old corporation was closed with a letter offering up the assets to pay off any final debt owed. After an allotted time went by and there were no takers, a new business was formed excluding the assets of the previous company which are still in storage.

This is a small debt, i.e. small claims court, but at the time with the economy the way it is, it is still unpayable. I think so far, I will be taking bigun's advice- since I did not sign a reaffirmation agreement for that particular debt. But if anyone has any other information, I am still all ears.

[justalayman]

like I had said before, I am a bit unknowing in this area but I still have trouble seeing this as anything illegal due to your BK. This was not a personal debt so it was not part of your BK and the corp did not file BK so I cannot see how this would be an illegal reaffirmation but, yes, the best place to go is to your BK attorney and let him look at this.

If I am right, the only thing to worry about is; did you or the corp assume the debt and as such are legally liable for the debt.

Since you decided to pay this debt so that same company would sell to your new corp, the company billing you may have tendered the agreement to sell to you with the understanding you did assume the debt. That is something that you may have to hash out in court. Obviously you do not see it as such.

I see nothing wrong with that. In fact, I would think most any company would do something along this line. Think of it this way; you screwed them out of the money with the first corp. They now have a chance to collect that debt from, guess who? The original debtor.

If you believe you did not contract to pay the old debt, tell them to get lost and sue you for it. The judge will decide. Whoops, I guess they are already doing that.