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I sold my portion of my company, am I still responsible for an overdue bill?

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exfounder072019

New member
I left a company I co-founded and sold my shares back to the company after a falling out with my business partner several months ago. At that time my now ex co founder immediately cancelled our contract with a large payroll company and stopped all automatic withdrawal from our company bank account. There was still an outstanding balance that didn't get paid to the payroll company because they could not issue the automatic withdrawal. I was the one that signed the initial payroll contracts on behalf of the company, but my old co-founder is refusing to pay the balance. He says I should be the one to pay the balance. We were using the payroll service for several months before the cancellation. Will I be held accountable for the remaining balance? (~$1000) A debt collector has contacted us both for the balance. The company is a Delaware S Corp and operated out of Cambridge, MA.
 


Zigner

Senior Member, Non-Attorney
If you personally guaranteed it, then yes, you can be held personally responsible.
 

LdiJ

Senior Member
I left a company I co-founded and sold my shares back to the company after a falling out with my business partner several months ago. At that time my now ex co founder immediately cancelled our contract with a large payroll company and stopped all automatic withdrawal from our company bank account. There was still an outstanding balance that didn't get paid to the payroll company because they could not issue the automatic withdrawal. I was the one that signed the initial payroll contracts on behalf of the company, but my old co-founder is refusing to pay the balance. He says I should be the one to pay the balance. We were using the payroll service for several months before the cancellation. Will I be held accountable for the remaining balance? (~$1000) A debt collector has contacted us both for the balance. The company is a Delaware S Corp and operated out of Cambridge, MA.
If you signed a personal guarantee along with the contract then yes, they can hold you responsible for it.

However I am totally flummoxed that your former partner think that you should pay the bill.
 

exfounder072019

New member
If you signed a personal guarantee along with the contract then yes, they can hold you responsible for it.

However I am totally flummoxed that your former partner think that you should pay the bill.
So the same day I left the company, I also issued payroll via a recorded call with a payroll company representative to all of our employees (including myself) in the morning. This was the normal day of the month to submit payroll, and several hours before I officially resigned and a day before I sold my shares. I notified him I was going to do this and the amounts distributed, the fees, and such. Anyways, skip to after I left and our personal situation had gotten worse. He now claims I stole company money by distributing payroll that day. So he goes and cancels our contract with the payroll company (prematurely, causing extra fees) and cancels most of our bank accounts. So the payroll company can't withdraw and he thinks I should pay it because he says I "stole" from the company by paying myself and other employees for time we worked. I paid myself and others their normal salary while I was still in my full role and title. He's sort of gone a little crazy.
 

PayrollHRGuy

Senior Member
As has been mentioned if you signed a personal guarntee you are most definitely on the hook. I see a lot of payroll service contracts and I'll tell you the are about 50/50 have the personal guarantee.
 

Litigator22

Active Member
So the same day I left the company, I also issued payroll via a recorded call with a payroll company representative to all of our employees (including myself) in the morning. This was the normal day of the month to submit payroll, and several hours before I officially resigned and a day before I sold my shares. I notified him I was going to do this and the amounts distributed, the fees, and such. Anyways, skip to after I left and our personal situation had gotten worse. He now claims I stole company money by distributing payroll that day. So he goes and cancels our contract with the payroll company (prematurely, causing extra fees) and cancels most of our bank accounts. So the payroll company can't withdraw and he thinks I should pay it because he says I "stole" from the company by paying myself and other employees for time we worked. I paid myself and others their normal salary while I was still in my full role and title. He's sort of gone a little crazy.

Your initial post states that you signed a payroll service contract on behalf of the S corporation. Since then three responses allude to the probability of your having personally guaranteed that service contract. With one contributor knowledgeable of such affairs posing that it is as likely that you did as it is that you didn't.

Rather than belaboring the thread with irrelevant motives as to why the S corp has failed to honor that service contract why do you leave such a vital issue hanging? Did you in any wise personally guarantee the S corporation's performance under the payroll service contract?

Also where you write that "a debt collector has contacted us both for the balance" whom or what is the other half of both? The S corp or the he that says you stole from the company?
 

exfounder072019

New member
Your initial post states that you signed a payroll service contract on behalf of the S corporation. Since then three responses allude to the probability of your having personally guaranteed that service contract. With one contributor knowledgeable of such affairs posing that it is as likely that you did as it is that you didn't.

Rather than belaboring the thread with irrelevant motives as to why the S corp has failed to honor that service contract why do you leave such a vital issue hanging? Did you in any wise personally guarantee the S corporation's performance under the payroll service contract?

Also where you write that "a debt collector has contacted us both for the balance" whom or what is the other half of both? The S corp or the he that says you stole from the company?
First, I do not mean to leave it hanging. This thread is not my only means of answering the question. My co founder refuses to send me copies of the initial contract which are stored at the office. I have contacted the payroll company and they sent me copies of a couple of the signature pages last night. The pages show that I am signing as an "authorized signer" for the "client" - the client being the Company - and I don't see any personal guarantee. However, I am going to contact the payroll company again to verify this and see if they have complete copies of the contracts. I do not remember ever giving a personal guarantee, I don't know why I ever would have signed that.

When I said "both" I meant he first contacted the ex business partner who immediately told him "this is not my business and is entirely [My name]'s issue". So since my name was on the form the debt collector did contact me as well.
 

Litigator22

Active Member
First, I do not mean to leave it hanging. This thread is not my only means of answering the question. My co founder refuses to send me copies of the initial contract which are stored at the office. I have contacted the payroll company and they sent me copies of a couple of the signature pages last night. The pages show that I am signing as an "authorized signer" for the "client" - the client being the Company - and I don't see any personal guarantee. However, I am going to contact the payroll company again to verify this and see if they have complete copies of the contracts. I do not remember ever giving a personal guarantee, I don't know why I ever would have signed that.

When I said "both" I meant he (?) first contacted the ex business partner who immediately told him (?) this is not my business and is entirely [My name]'s issue". So since my name was on the form the debt collector did contact me as well.
Of course this isn't the only source that can answering the question of "will you be held accountable for the remaining balance"! But let's not lose sight of the fact that this particular source did not initiate the inquiry nor are the contributors clairvoyant.

You might consider casting another line in the direction of a local attorney who upon vetting out the identity of "he" and "him" will explain your rights under the Fair Debt Collection Practices Act - particularly Section 809 Validation of debts. Some of which are time sensitive.

Good luck
 

exfounder072019

New member
Of course this isn't the only source that can answering the question of "will you be held accountable for the remaining balance"! But let's not lose sight of the fact that this particular source did not initiate the inquiry nor are the contributors clairvoyant.

You might consider casting another line in the direction of a local attorney who upon vetting out the identity of "he" and "him" will explain your rights under the Fair Debt Collection Practices Act - particularly Section 809 Validation of debts. Some of which are time sensitive.

Good luck
So to clarify the above statements. The debt collector contacted my ex business partner first. I am not sure by what avenue the debt collector contacted my ex business partner (whether through someone else at the company or directly to the business partner), but the debt collector told me that he (the debt collector) had spoken with my ex business partner and told me what my ex business partner had said.

I appreciate everyone who is contributing as well!
 

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