Legal Question in Business Law in Massachusetts

S Corp Contract_Company Debt

My husband and 1 partner formed an S Corp. The business closed earlier this year and the 1 partner stopped making credit card payments and the bank took our money from personal savings since it was the same banking institution. What kind of recourse do we have against partner since we paid the company debt in full? There is a contract stating partnership is 50/50. The amount of debt was $10,400. Is it worth it to pursue legal action? The partners does not have many assets to go after. Right now my husband and I covered 100% of the company debt out of our own pocket.


Asked on 12/10/08, 4:51 pm

2 Answers from Attorneys

Re: S Corp Contract_Company Debt

First, the question is was your husband personally obligated for the debt?

If not, the bank had no right to take the money out of your account.

Second, if he and his partner were both obligated to pay this debt personally then you have a claim for 50% of the amount of the debt.

The problem is as you say collecting it. Small claims is limited to less than half of the $5000 you need to recover. I am not sure a collection attorney would take this on contingency, but he might.

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Answered on 12/10/08, 5:44 pm
Craig J. Tiedemann Kajko, Weisman & Colasanti, LLP

Re: S Corp Contract_Company Debt

If the bank took money to satfisfy a legitimate corporate expense, the business operating agreement and/or the MA Business Corps Law may provide you the ability to recover whatever is due the other business partner, perhaps including any attorneys' fees necessary to collect legitimate debt.

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Answered on 12/12/08, 12:20 am


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