Legal Question in Bankruptcy in New York

Corporate veil / Collectiom agency

A broad outline of my situation is as follows:

1. I own 50% shares in a small Illinois S-Corp; the company is in good standing with the secy of state.

2. On advice of my accountant, I have always kept an arms length dealing with the company (separate bank account, no mingling of personal assets, clearly stating company name in all communications etc).

3. In 2005 I signed a contract with a large pubisher of periodicals involving paying them $30,000 for advertising (I signed as president of the company, no personal guarantees).

4. My company paid them $15,000 during 2006; it still owes $15,000 more to them.

5. The company now has no revenues and has a miniscule balance in the bank. The publication firm has assigned a collection agency. The collection agency has threatened to sue me personally in New York to recover.

A bankruptcy attorney here dismissed me on the phone saying there's no need to file for chapter 7 corporate bankruptcy, just dont file franchise taxes with the state - and the corporation will die a natural death.

1. Can they sue me personaly?

2. In the event I get sued, will it be easy to fight it? Also, Will I have to travel to NY for court hearings etc.

Any help would be appreciated.


Asked on 3/23/07, 7:30 pm

1 Answer from Attorneys
Joseph Michelotti Michelotti & Associates, Ltd.

Re: Corporate veil / Collectiom agency

depends on the contract you signed.

some contracts contain language saying that the signor is liable in their individual capacity. Also, venue (where the case can be heard) can be determined in the contract

so, yes they can sue you personally and if they sue you in new york you do have to answer the case there.

the contract has to be reviewed to answer these questions.

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Answered on 3/23/07, 10:15 pm


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