Legal Question in Business Law in California

Re: Corporate Law

Anybody can sue anybody for anything. Winning is different. If the officers and directors didn't properly conduct the affairs and records of the corp, they might expose themselves to a 'pierce the veil' suit. They might have signed personal liability agreements. They might have committed personal frauds or torts. They might have done something in violation of the corp rules and regs, etc., etc. The bottom line is that IF sued, then they'll have to defend. Feel free to contact me if that's you getting sued, or if you're the one considering suing with proper grounds, and you want the legal help you'll need.

Re: Corporate Law

They can indeed be sued. Whether they might lose will depend upon the facts and allegations. Without knowing what happened, what the plaintiffs claim happened or what legal doctrines the plaintiffs have invoked, that's the best I can do.

Re: Corporate Law

Yes, indeed! In fact, the officers, directors and/or former shareholders of a recently-dissolved (or recently liquidated) corporation are MORE likely to be used than while the corporation is active, and in many cases and on several theories are MORE likely to be found liable at the conclusion of the suit.

The main reason is that while a corporation is operating, its insiders are relatively immune from personal liability, and finding them personally liable usually requires application of the "alter ego" theory (corporation being disregarded by owners) or, in the case of a stockholder suit, some breach of duty by the directors.

When the corporation is shut down, the insiders also have a statutory duty to distribute remaining corporate property (including but not limited to its money) properly, making sure creditors are paid 100 cents on the dollar before insiders get their first nickel.

California's statutes specifically authorize lawsuits against shareholders receiving distributions in preference to creditors. Corporations Code sections 2009 and 2011.

If the corporation was not a California corporation, some specific provisions of California law may not apply, but most states have similar laws, and some of them (Nevada, for example) have even tougher provisions for the protection of non-insider creditors of and claimants against a dissolved or liquidated corporation and/or its former officers, directors and shareholders (collectively, its "insiders").