When an insolvent debtor corporation transfers money (or other assets) to its principles (Insiders), or corporate monies are used to pay Insiders’ personal debts, creditors can pursue these Insiders as fraudulent transferees of Debtor assets even after the Debtor ceases to do business. Alternatively, there may be a basis to hold these Insiders liable by piercing the Debtor’s corporate veil.
How many Debtors, when facing financial difficulty, close their corporate doors and the Insiders start up a new, unrelated business? “None”, you say? Yes, it’s true, “Old dogs rarely learn new tricks,” and Insiders almost always open a similar business under a new name. And the successor can be held liable for the old debt.
Complex debt collection requires more than chasing some poor debtor with a credit report that screams “Debtor’s Prison”. It requires a knowledge of fraudulent transfer law, successor liability law, and piercing corporate veil. For too many attorneys, pursuing a Judgment against a defunct or insolvent Debtor is analogous to a dog chasing a car. What does the dog do when he catches it?
At Steven J. Gutter, P.A., we know what to do. Contact us to discuss your collection needs and our tailored contingent fee structures