Legal Question in Business Law in Massachusetts

LLC out of business

my husband had an LLC, a livery service, that had to close its doors due to poor economic climate, and other issues. We now have debt collectors looking to settle for monies owed. We thought that having an LLC protects him personally and that he is not liable for these debts since the company is out of business and there is no money to pay these collectors. Are we protected? Do we have to pay any items since they are all in the company's name and the comoany has been dissolved? PLS Advise!

Also, the previous owner of the business, the man that my husband bought the company from, is owed money from the initial purchase, for which my husband signed a note. There is a balance owed to him, about 9,500 dollars.

Needless to say, we do not have this money. Can he sue my husband? Is my husband liable for this money personally? HELP! THANK YOU!


Asked on 1/23/09, 1:38 pm

3 Answers from Attorneys
JOHN TATOIAN LAW OFFICE OF JOHN A. TATOIAN ESQ.*Licensed Only in Massachusetts

Re: LLC out of business

Generally, a Limited Liability Company ("LLC") protects the personal assets of its members, subject to certain exceptions ( tort committed by one of its members, personal guarantee of note by member etc.) However, upon dissolution of the LLC, the laws of the Commonwealth of Massachusetts (see Massachusetts General Laws, Chapter 156C, Section 46) dictate the priority of distributions following dissolution. Essentially, the "liquidating trustee" will be personally liable for any distributions in derogation of the provisions of M.G.L. 156C, Sec. 46. Please feel free to contact my office for a free initial consult based upon the facts of your specific situation.;))

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Answered on 1/25/09, 1:55 pm

Re: LLC out of business

If your LLC was set up correctly and your business transactions were conducted correctly, and if the loans and notes were all transacted without personal surety and only eneterd into in corporate form, then you will be protected. Check with the businesses corporate counsel to review the requisite records.

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Answered on 1/23/09, 2:22 pm

Re: LLC out of business

As to the note on the purchase, if your husband signed the note personally then he is liable for those debts.

As to the dissolution of the LLC, the LLC debtors can only seek funds from your husband if he actually took money other than salary from the LLC when it dissolved.

They may sue him but unless he signed personally for the debt he should not be liable for those monies.

Good Luck

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Answered on 1/23/09, 2:32 pm


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