Legal Question in Business Law in California

A judgment creditor can levy on any personal assets found, including stock he owns in a corporation.

If Doe keeps his assets separate from ABC's then the company cannot be held liable for is actions. But if Doe himself is held liable, the judgment creditor will be able to execute against his assets -- including his stock in ABC.

The foregoing answers are correct, but don't exactly address the question.

What you are asking about is called "reverse veil-piercing." It's rather well known that an individual can be held liable for the debts of his closely-held corporation if the corporation were run as the stockholder's "alter ego" when necessary to assure justice and prevent fraud.

However, reverse veil piercing is NOT a well-accepted and recognized legal theory. A corporation is seldom if ever held responsible for the personal liabilities of its shareholder. A shareholder's personal creditors cannot reach the corporation's assets by holding the corporation liable as the shareholder's alter ego. This is so even where a controlling shareholder transferred personal assets to the corporation for the express purpose of thwarting creditors. California follows the weight of authority in rejecting the �reverse piercing� theory on the grounds that it:

� Bypasses normal collection procedures whereby the shareholder's judgment creditors attach his or her shares in the corporation and not the corporation's assets;

� Prejudices the corporation's other innocent shareholders; and

� Is unnecessary, since more traditional theories�such as conversion, fraudulent conveyance, respondeat superior and agency law�adequately allow recovery, where appropriate, against a corporation for a controlling shareholder's wrongful conduct. [Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 CA4th 1510, 1518�1524; see Cascade Energy & Metals Corp. v. Banks (10th Cir. 1990) 896 F2d 1557, 1577]

No as long as corporate formalities are observed and that conduct that lead to judgment was not done in course and scope of his employment with the corp.

Of course his personal assets can be levied that could include his shares of stock.

Well you've gotten a lot of answers, all of which even confuse me, though as a lawyer I can figure them out and they are basically correct. To answer your question in layman's terms, though, the answer is "yes" but not exactly as you might be thinking from the way you ask the question.

We are supposing that Doe gets a judgement against him that has nothing to do with ABC Cookies, Inc. Everyone is correct that the judgment creditor cannot just go collect against ABC. What happens instead is the judgment creditor has the right to seize Doe's ownership interest in ABC, just like they could seize his shares of IBM or Google from his e*Trade account. If Doe is the sole shareholder, or his shares are a controlling portion of the company, the judgment creditor then becomes the owner or controlling shareholder of ABC. At THAT point, the judgment creditor can do whatever they want with the company, subject to any minority shareholder rights and the rights of any customers, vendors or creditors of the corporation. So they can sell the company as a going concern, or liquidate it by selling off all the assets. They can empty the bank accounts, collect the accounts payable, etc. They can run the company and take the profits, or squeeze out any money they can get and close the doors. So, yes they can get the assets of the corporation, it's just a two-step process: seize the stock of ABC, and then do what they want with the assets as the new owner.