Corporate Law Can I be sued if I have a corporation?

[jordan]

I am one of three owners of a corporation that unfortunately isn't making ends meet after 2 years. We bought some stuff on credit but it appears that we are going to have to close down the business at the end of the month and won't have enough in the business to pay everyone back completely, probably only 80%. Word has got out about this and one concerned seller who is owed money from us threatened me that he'll sue the company and me and the other owners if he doesn't get all his money back. Can he do this? Thanks.

 

[Michael Wechsler]

People choose corporations for many reasons, one of which is personal protection from creditors. I think I understand where you are going here and hopefully this makes things clearer. A corporation is viewed as a separate person. In some instances an individual can be sued by "piercing the corporate veil" when a person uses a corporation just as a sham, never treating it like a separate person. For example, if someone used their own personal bank accounts as though no corporation existed, then the law may treat the owner of the corporation as though no seperate person really existed and allow a suit against that person. That doesn't seem to be the case here. Note, there are other circumstances where individuals can be sued and this is just one instance that seems to be where you are going with the question.