Legal Question in Business Law in California

Re: Suspended Corporations

Sue them if you have a justified claim. They are prevented from taking legal action, not you.

Re: Suspended Corporations

Go for it. They won't be able to defend the lawsuit without reviving the corporation. It would be a misdemeanor crime to attempt to represent them in court.

Re: Suspended Corporations

Suspension is a widely-used concept in California law, and in each context it means something a little different and has a slightly different ultimate purpose. Drivers licenses are suspended to try to get unsafe drivers off the road. It often doesn't work. Car registrations are suspended for failure to pass the smog test or to renew your registration. Somewhat similarly, both the Franchise Tax Board and the Secretary of State use suspension as a carrot and stick to get corporations to do what the law requires. In the FTB case, it is to force the corporation to file tax returns and pay at least the minimum franchise tax ($800 a year), and for the SS, it is to induce corporations to file their annual statements of officers, directors, etc.

A suspended corporation, like a suspended driver, is likely to "motor on" as though nothing happened. In fact, I'm sure a lot of suspended corporations are oblivious of the fact that they're suspended.

Suspension has an interesting mixed bag of effects. Perhaps most obvious and troublesome to the corporation is that if it is sued it cannot defend, and if it needs to sue, it will be stopped short early on if the defendant gets wise to the fact of suspension.

As to contracts entered into by the suspended corporation during suspension, the contracts are voidable by the other party during the period of suspension, but voiding them requires said other party to take legal action under the general laws and procedure applying to a party's right to rescind a contract, including the requirement of bringing a legal action for rescission. So, as a practical matter, few parties are going to try to rescind, just because it's an expensive hassle, unless the contracts involve beaucoup bucks.

A suspended corporation is a wounded duck, but not a dead duck. Vulnerable in court, but still able to struggle on in the real world.