Legal Question in Business Law in California
Function or financial
My question involves financial responsibility of corporate officers. I was the vice president of a small consulting firm. I had no ownership. All stock was held by one person, the president. Company operations, controlled by the whim of the pres.,
more closely resembled a proprietorship. Five years ago the company acquired a line of credit with a bank. I signed, as vice pres., one section of the
application. The information on that part of the form was related to operation and was at the time accurate. The financial info. provide for securing
the loan was that of the pres. and his wife.
The president of the company essentially ran it into the ground through too much golf and too little work. I quit on 11/26/99. I�ve been told by the �corporate� attorney that, if the company goes bankrupt, the bank will come after me. Since I didn�t
own any of the comp. and financial statements from me were not evaluated by the bank, How strong a case can the bank make against me? Your assistance is appreciated.
2 Answers from Attorneys
Re: Function or financial
It depends on what you signed. If you agreed to be liable, regardless of whether your credit was considered, and if you signed the bank can hold you liable. In such a case you would have to prove that the bank never intended to look to you for reimbursement, and that neither the bank nor you considered you to be liable. Go talk to the bank and find out what they now think. Also find the loan officer who made the loan and see what his understanding of what happened is. If the loan officer will testify that the bank never thought of you as being liable for the company debt then you may eventually get off ----- but that doesn't mean that a bankruptcy trustee wouldn't look to you for some reimbursement. If you think there is a substantial chance that the company is going bankrupty you should start to do some pre-bankruptcy financial planning yourself (which is legal).
Re: Function or financial
On the facts you relate I do not think you are liable. You did not make any misrepresentations and the bank did not rely on your financial statements. Either would be a good defense. However, those facts may be hotly disputed. If the bank sues you, it may claim it relied on your financial statements even if it did not. Without more info, it's hard to estimate the likelihood the bank will sue you.
If you want to consult further, I will do so by telephone. My consultation fee is $60.00 and can be charged. My number is 909.383.9570.
This reply is a courtesy and does not create an attorney client relationship.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
