Legal Question in Business Law in California

You didn't say whether the "company" is a sole proprietorship. partnership, corporation, LLC or whatever. This could make a difference. Also, a company or personal bankruptcy might change things.

The basic rules are somewhat as follows:

If the company were a corporation or LLC, when it closed it and its owners or managers were under an obligation to liquidate its assets and pay its bills, including making a provision for likely contingent liabilities such as guarantees, before returning the first penny, or handing over the first piece of corporate property, to the owner(s) or stockholder(s). If the company did that, and the owners and other insiders got nothing, there would be no on-going liability.

If the company were a proprietorship or partnership, the owner(s) would continue to be liable for the money-back guarantee. There might be a statute of limitations defense, depending upon the wording of the guarantee.

Additional facts might require a different conclusion, but there are the basic rules.

Mr. Whipple's answer is correct, but incomplete. Even if the company was a corporation or an LLC, if it was not adequately capitalized or it's corporate form was not properly maintained and honored as a completely separate legal person, such that it was operated really as a sole proprietorship or partnership, then even if the business was wound up properly as Mr. Whipple describes, the corporate form might be disregarded by a court and the owner(s) held personally liable.

The other attorneys are right on point, legally-speaking. From a practical standpoint, if a company is out of business, what consumer is going to pursue a money-back guaranty? Answer: nobody in 99%-plus of the cases. Consult with a good business attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Attorney

If it is closed, who is going to answer the phone and mail about guarantees?