Am I liable for a settlement from before I was President of corp?

[mako482]

What is the name of your state (only U.S. law)? Florida

First of all I received a collections call today telling me the corporation I am president of owes $3000.00 from a lawsuit.

Some history...I took this corporation over this year as President due to my father passing away and I continued on to help my family. Apparently in 2007 he went to court over a job that ended in him (the corporation) being sued for this money. Now they are coming after the corporation for it and contacting me. This company is barely hanging on and I don't even have any work currently, I certainly don't have any money.

What are my options? I am about to dump this thing as it is, will I still be personally responsible at all? I didn't ask for this!

 

[cyjeff]

The company is liable for the debt.

I don't know how the company is structured and, so, cannot comment upon your personal liability.

Is this a true corporation or a Subchapter S?

 

[mako482]

Thank you so much for replying.

It is an S Corporation. I just sincerely do not have the money and am barely scraping by as it is. My mother doesn't need me to keep this up anymore and I have been looking for work so I can close this thing down and then I get this call.

 

[HomeGuru]

Thank you so much for replying.

It is an S Corporation. I just sincerely do not have the money and am barely scraping by as it is. My mother doesn't need me to keep this up anymore and I have been looking for work so I can close this thing down and then I get this call.

**A: I suggest you negotiate a repayment plan.

 

[mako482]

**A: I suggest you negotiate a repayment plan.

That is one of my options, of course and certainly a rational suggestion. I have to know what other options do I have and what are the implication of those options.

Is walking away from the corporation, as I was already set to do prior to this, a viable option? This is just a nightmare scenario for me right now. I did nothing wrong and this lawsuit had nothing to do with me, I feel like I am being penalized for doing the right thing and helping my family out after my father passed.

 

[latigo]

I would be interested in learning how you “took over the corporation as president”.

His presidency was not inheritable – the office was left vacant upon his death - so on what basis do you claim to have succeeded to that office. Did the board of director (s) nominate you to succeed as president?

And what disposition was made through probate of any corporate shares in the company that he owned at death.
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I strongly suspect that this corporation was nothing but a shell or front in the name of which your father purported to conduct his personal business affairs. (Known in legalese as his ”alter ego”.)

And that is not uncommon, but it has financial repercussion for the individual or individuals conducting the business. Mainly being unable to point to the corporation as shielding them from personal liability for the business debts.

There are some critical decisions and measures that you should be taking at this point, but I’m not going to take the time to explain them unless you indicate a sincere interest in listening.

 

[mako482]

I would be interested in learning how you “took over the corporation as president”. His presidency was not inheritable – the office was left vacant upon his death - so on what basis do you claim to have succeeded to that office. Did the board of director (s) nominate you to succeed as president?

I was already listed as an officer in the corporation before he passed, on the next annual report after his passing I was made the President.

And what disposition was made through probate of any corporate shares in the company that he owned at death.

Not sure what you mean, but it was set up 80/10/10. This is a very small business, residential painting, I don't know if that matters.

I strongly suspect that this corporation was nothing but a shell or front in the name of which your father purported to conduct his personal business affairs. (Known in legalese as his ”alter ego”.)

And that is not uncommon, but it has financial repercussion for the individual or individuals conducting the business. Mainly being unable to point to the corporation as shielding them from personal liability for the business debts.

I have no clue if that applies here or not.

There are some critical decisions and measures that you should be taking at this point, but I’m not going to take the time to explain them unless you indicate a sincere interest in listening.

Absolutely sir, which is why I am here. I just wanted to hear all options so I could make the best decision available to me, not just the one suggestion.

Thank you for your time. I really got in over my head I think, my intention was to run this thing until my mother did not need financial help from it any longer and for his workers to get other jobs and that was it.

 

[Zigner]

I was already listed as an officer in the corporation before he passed, on the next annual report after his passing I was made the President.

Based on this, I would venture to say that it will be very easy to pierce the corporate veil. (Google it)

 

[mako482]

Based on this, I would venture to say that it will be very easy to pierce the corporate veil. (Google it)

Can I ask why? I read the term, but do not see why you would say this based on what you quoted.

I pray for some clarity in this matter, wow did I get in over my head.

 

[latigo]

I was already listed as an officer in the corporation before he passed, on the next annual report after his passing I was made the President.

I just wanted to hear all options so I could make the best decision available to me, not just the one suggestion.

My major concern was that in assuming management of the corporation’s business affairs that you not inadvertently expose yourself to personal liability to future business creditors.

But now learning that it is strictly a service business it wouldn’t appear that there could be much capital investment or inventory involved to justify continuing the service under the same entity.

Walking away from it might be your best course, but I suggest that you talk to an attorney regarding the implications from the judgment, the status of your father’s estate and how to proceed to wind up the corporate affairs and deal with its creditors.

Inasmuch as you served as an officer prior to your father’s death you should discuss with the attorney your accountability for past corporate debts. And in the light of whether or not the corporation functioned as a separate entity and not the alter ego of management.

 

[mako482]

My major concern was that in assuming management of the corporation’s business affairs that you not inadvertently expose yourself to personal liability to future business creditors.

But now learning that it is strictly a service business it wouldn’t appear that there could be much capital investment or inventory involved to justify continuing the service under the same entity.

Walking away from it might be your best course, but I suggest that you talk to an attorney regarding the implications from the judgment, the status of your father’s estate and how to proceed to wind up the corporate affairs and deal with its creditors.

Inasmuch as you served as an officer prior to your father’s death you should discuss with the attorney your accountability for past corporate debts. And in the light of whether or not the corporation functioned as a separate entity and not the alter ego of management.

Thank you sir for your, I will take this under advisement and go from here.

 

[Zigner]

The most glaring problem is that you don't hold meetings of the corporate officers when new officers are installed.