liabilities of ownership in a corporation

from new york..

i have been offered a small percentage of ownership in the corporation i work for which is now wholly owned by two individuals. the business is in dire straits and is carrying a high load of both secured and unsecured debt. in the event the we don't pull through these hard times what is my liabilty for the outstanding debt as a owner? i have not personally secured any of the existing debt but is there a possibility of creditors coming after me personally for the balances owed to them in the event of bankruptcy or a similar fate?

also, one of the first points in the partnership agreement states that i acknowledge the shares currently have a negative net worth. does this mean that i would actually have to pay off the negative value of the shares to exit the partnership?

Your question requires a study not only of the Partnership agreement, but also of the Corporation charter, what type of corporation it is and a whole plethera of other factors including a study of business practices already completed.

In most cases, a corporation is a separate entity with it's own assets and liabilities. However, depending on the type of corporation this is, you COULD be held personally liable.

You really need to get a copy of the incorporation documents, the partnership agreement and an audit of the financials and ask a corporation attorney to give you an opinion based on a thorough reading of all of these.

Why would you want to throw money at what appears to be a sinking ship? If you don't want your money, send it to me.

racer72 said:

Why would you want to throw money at what appears to be a sinking ship? If you don't want your money, send it to me.

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**A: Correction- the FreeAdvice website has first right of refusal on all monies from users of this website.

thank you

thank you for the advice. in regards to why i would even consider accepting this; it is being given to me as a gift or form of compensation from a family member who is the majority owner. refusing it would undoubtedly alter the nature of our relationship. i want to hang in there and do everything i can for the business but i seem to have found myself in a very awkward position.

i had a follow up to the first question too. it is whether or not by accepting the stock at a negative net worth i would then have to pay my way out of the partnership if i felt it necessary to leave for some reason or was in breach of the partnership agreement and forced out.