Legal Question in Business Law in California

Re: Collection

Being suspended does not affect the company's obligation to pay you and does not affect your rights against it. You can sue it just as you could have before it was suspended, and it won't be able to defend itself against the lawsuit unless and until the suspension is cured.

But there is usually a reason corporations get suspended, and those reasons are usually related to their financial health. There's a good chance the business is no longer solvent. That may not prevent you from collecting your debt (you may be able to collect yours ahead of other creditors', for example, or there may be a basis on which to sue the officers and/or directors), but it will probably make the process more complicated.

Re: Collection

You would sue the corporation just like any other corporation. The only difference is that the suspension affects the corporation's ability to appear in the case.

Suspension generally means either (1) the corporation has not filed one of the required annual forms with the Secretary of State, or (2) the corporation has failed to file with the FTB (i.e. taxes).

Either way, you can still sue the corporation.

Re: Collection

Not only can you sue a suspended corporation, you can sue a dissolved corporation and in some cases you can sue and recover from its shareholders or former shareholders. See Corporations Code sections 2010 and 2011, which provide creditors with powerful tools to prevent insider looting of corporations that are sinking ships.