Legal Question in Business Law in Delaware

Re: Liability of officers of disolved corporations for causes of actions that ar

Under California's Corporations Code (which in many ways is modeled after and similar to Delaware law) the former shareholder is liable up to the amount of his or her distribution, if any, at the time of dissolution. A dissolved corporation is also liable up to the amount of any undistributed assts, which legally include any insurance policy that affords coverage. In past boat accident cases, the problem I have encountered is the watercraft exclusion in many insurance policies--unless a maritime policy was in force. The dissolved corporation has the legal capacity to defend itself in court. And just because the corporation is dissolved with no assets, letting the claimant take a default judgment could be a problem because the judgment holder can then bring a motion to amend the judgment on the grounds a individual stockholder was the corporation's "alter ego" with the court adding the individual as a judgment debtor. This is just general information and should not be relied upon as legal advice.

Re: Liability of officers of disolved corporations for causes of actions that ar

In addition to what Mr. McMeans said, you will need a lawyer who can sort out the effect of federal admiralty law on the question. In addition, you should check with the hull insurer to see if there is coverage, and whether former shareholders are owed a legal defense under the policy. This kind of claim is right up my alley, and if you would like help, please let me know. If you are not in my area, I can probably refer you to a top notch maritime lawyer.

Re: Liability of officers of disolved corporations for causes of actions that ar

The controlling provision of the corporations code is as follows -- Corporations Code section 2011. Short answer is that the shareholder that received the boat may be liable. Depends on some additional facts.

You will want to retain a lawyer handling business litigation to represent you in this matter, so that the enforcement action is appropriately done. Make sure that you don't act within the statute of limitations. Your lawyer on the underlying claim may have such experience, perhaps not. From the facts given, it is likely that the whole reason for the dissolution was to thwart the underlying claim. Of course, there remains the question whether the corporation made arrangement through a liquidating trust for satisfaction of claims of creditors, and you simply do not know about it. Many times when an entity is dissolved with pending claims, the entity will retain a so-called expert to opine on the value of the claims (individually and in the aggregate) and then make deposit into a "liquidating trust" of funds sufficient to meet the amount estimated. This process is discussed in the sections just prior to 2011 in the corporations code.