to company "A", the very next day Company "B" shuts doors and starts up a new company "C". Who is responsible for the satisfying the judgement against "B:?
Can company "B" close their doors prior to entering the court room and start up a new company with an oustanding claim against Comapny "B"?
JB.
2007-04-12 12:21:30 · 3 answers · asked by Anonymous in Politics & Government ➔ Law & Ethics
welcome to the wonderful world of business. That happens all the time.
2007-04-12 12:24:45 · answer #1 · answered by ryee40007 5 · 0⤊ 0⤋
This would be deemed illegal...the courts would see this as an attempt to circumvent court athority as an attempt not to pay.
The owners of company C would be liable to pay Company A..but since incorperating a company in most states is a time consuming process...it is unlikely this would happen in time.
In business law...there is always statutes that lay out paying the debts of a defunct company..and if a new company is the direct result they are responsible.
This may also lead to a principle called piercing the corporate veil...Usually shareholders are not liable for the debts of the company after their investment....but if the shareholders are doing something wrongful such as circumbent a court of jurisdiction...it could mean the shareholders are personally liable.
2007-04-12 20:21:47 · answer #2 · answered by Dr. Luv 5 · 0⤊ 0⤋
It depends on the com pay type. If you are talking about any other company than a corporation then the people responsible for the company will still have to pay.
A corporation is considered a legal entity so the individuals connected with that entity can't be held responsible for acts of the corporation. However, the corporation will be held accountable and it's assets will be attached to make sure it doesn't duck out on its debts in a manner that you described.
2007-04-12 19:27:47 · answer #3 · answered by Dan S 7 · 0⤊ 0⤋