Legal Question in Business Law in California

Re: im being sued, while in a bankrupcy

Bankruptcy may bar the lawsuit from going forward. We would have to review your paperwork and your bankruptcy to advise you further.

Re: im being sued, while in a bankrupcy

He could be liable on the full amount, although, depending on when the lawsuit was filed, the statute of limitation might preclude the suit. You should file with the court a Notice of Discharge in Bankruptcy if the bankruptcy was for you, personally, and attach the BK court's notice as an exhibit to the notice, to relieve you of liability.

Re: im being sued, while in a bankrupcy

Depending upon the financing agreement, your former partner could be liable to satisfy up to the full amount.

However, regarding your exposure, the debt may be discharged through your bankruptcy proceeding. Did the business file for bankruptcy or you, or both?

I would be willing to discuss some of the issues concerning your case to see if I may be of assistance.

I offer prospective clients a free initial consultation.

I look forward to speaking with you.

Yours truly,

Bryan

Re: im being sued, while in a bankrupcy

A guarantor is personally liable, and usually the guaranty is written so that each guarantor is jointly and severally liable for the entire amount. Corporations don't have partners, so strictly speaking principles from partnership law won't apply. A co-owner of a corporation who didn't sign a personal guaranty is not ordinarily liable for any of the corporation's debts; there are exceptions if the corporation was not run as a separate entity ("piercing the corporate veil") or if the insiders took assets at liquidation time in preference to the creditors (distributions illegal as fraudulent preferences).

This is a terrible trap for people making personal guarantees on behalf of corporations they partially own; the guarantees can out-live their intended life and continue to bind the guarantor long after he has bowed out of active participation. In some cases, notice to the creditor can protect the guarantor from further liability for future purchases, but a well-written guaranty cannot be disavowed for credit already extended.