Legal Question in Business Law in New York
I am a shareholder in an S Corporation in New York. The business is failing and we will probably be closing it in a couple of months. I still have a lease at strip plaza for another year. Can the landlord come after me personally for the balance of the lease? I know he can go after the corporation but I can guarantee after a few more months of losses there won't be anything in the corp. to go after.
4 Answers from Attorneys
There are a couple of factors that would have to be considered before one could fully answer this question.
1. The wording of the lease would have to be reviewed.
2. One would need to know more about whether the corporation was undercapitalized and how it was operated.
Piercing the corporate veil is difficult but not impossible - whether it could happen in your case would require a full review of your situation.
Much of this depends on the wording of the lease. Review it carefully and see if you signed any personal guarantees. Also, see if the corporation is the actual party to the agreement, and not you personally. As Mr. Browde stated above, even if you are not named personally anywhere in the lease, the corporate veil may still be pierced under certain circumstances.
The ability of the landlord to secure you personally is going to be governed by the terms of the lease.
Without reviewing the lease it is not possible to tell you with any certainty.
I agree that more facts are needed; to determine your defenses and the landlord's rights. If you did not give a personal guaranty, the corporation was not undercapitalized from the inception and you did nothing personally to dissipate its assets, you should be protected from any personal liability.
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