I am in NC and have a sub chapter s corp. We were sued and lost. The corp has almost no equity. If the company was dissolved could they come after me (president of the corporation) for the judgement?
Answer
If the judgment is just against the corporation and not against you then you are ok in terms of being directly liable. The problem is that when you go to dissolve the corporation, if there is a judgment against the corporation, then any assets of the corporation would be sold and use to pay the debts. So the proceeds of any assets go to the judgment creditors and not you. Once they are paid then any excess would go to you. If you were sued along with the corporation then then the creditor can try to enforce the judgment against you personally, but unlike your corporation, you would have the benefit of the personal exemptions.
If there is no equity in the company, you could do a few things:
(1) if the company has no plans to remain in business and if it has a lot of debts, maybe it should file a chapter 7 liquidation bankruptcy.
(2) if the company does not have enough debt to justify bankruptcy, you could just simply let the secretary of state administratively dissolve the company. This would work if there are no assets in the company - no vehicles, land, bank accounts etc. The judgment would still be there but if the corporation goes out of business, is dissolved and has no assets then I don't see what a creditor could do.
I am not a business lawyer - I handle consumer debts. Perhaps a business collections lawyer may be able to offer further insights as to what a judgment creditor could do.
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