Legal Question in Business Law in Georgia

Dissolving an S Corp

We have a small S Corp. There are no employees. Just my husband and myself. We did subcontract work for an out of state company in 2004. The company filed bankruptcy. Now the trustee wants to avoid all of the payments made 90 days prior. This totals around $90k. We are still owed $81K by the company. The trustee has filed suit against us for the $90K. We simply can't pay it or pay for legal counsel to pursue. We haven't recovered from the $81K not being paid and doubt that we ever will. If we dissolve the business, can the trustee still try to collect?


Asked on 7/24/06, 5:07 pm

2 Answers from Attorneys
Scott Riddle Law Office of Scott B. Riddle, LLC

Re: Dissolving an S Corp

The trustee will be like any other creditor who gets a judgment, and he/she will be able to go after bank accounts, and other assets after the judgment is obtained. However, if the company has no assets there may be nothing to get. Realistically, trustees are less likely to spend considerable time on an uncollectible debt. It usually is not worth the time, or keeping the bankruptcy estate open.

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Answered on 7/24/06, 5:11 pm
Glenn M. Lyon, Esq. MacGREGOR LYON, LLC, Business Attorneys

Re: Dissolving an S Corp

You may dissolve the corporation, but you would still need to disburse any assets to creditors, including anyone with a potential judgment. In addition, if you distributed dividends to you and your husband, you might be liable for those amounts if all creditors were not satisfied. Other than that, the trustee would be out of luck after dissolution.

If you would like to discuss any issues further, please feel free to contact my office. My contact information is below. Thank you.

The foregoing is general information only, not specific legal advice. No attorney/client relation has been created or should be implied.

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Answered on 7/24/06, 5:13 pm


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