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A Washington State Corporation closes and ceases to do business and the owner of the company filed for Chapter 7

Gig Harbor, WA |

with L & I as one of the listed debtors, can the State pursue legal action for balance after the discharge?

Attorney Answers 7

Posted

L&I? It helps to write out unknown acronyms. If you were writing NASA that would be another story.

This answer is for informational purposes only and is not legal advice regarding your question and does not establish an attorney-client relationship.

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Brian M Gottesman

Brian M Gottesman

Posted

license and inspection - a state agency.

Posted

A listed debtor? Or a listed creditor? It makes it impossible to answer a question when you misuse legal terms. Hope this perspective helps!

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Posted

It's really hard to say what the state can do becasue it depends on the nature of why you were assesses fees/costs etc by L & I.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.

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James Henry MaGee

James Henry MaGee

Posted

This is correct - really need to know more. Is it failure to pay workers' compensation premiums on employees that were due from the corporation? Is it some sort of workplace safety violation? Is it fines for improperly performed work? Each of these could have different treatment - also depending on who was actually cited if it was for a fine - corporation or an individual person who was owner and on site and who received the fine/citation? This is a good cautious answer as not enough info is provided by the poster. I agree. Good answer. James H. MaGee, Washington Bankruptcy Attorney, Offices in Puyallup, Tacoma and Bremerton.

Posted

Generally, yes. If the debts were finres or taxes then there is a general presumption that the officers have personal liability. If they were in fact for taxes and/or fines then they would not be dischargeable in a capter 7 and the State's claim would survive.

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Posted

Once the businesses ceases to exist and or file for Chapter 7 liquidation the L&I, taxes as well as accrued interest & penalties will revert to the officers of the company. I would recommend discusses this further with an attorney for further discussion.

The Law Office of Tuella O. Sykes, PLLC 600 1st Avenue, Suite 307 Seattle, WA 98104 Phone: 206-721-0086 Fax: 206-721-0087 Website: www.tuellasykeslaw.com Call and mention this post for a free 20 minute consultation

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Posted

Both Mr. Jenson and Ms. Sykes are correct and - if you look at the types of lawyers that they are you will see that if you are asking this question for yourself that you have two different types of attorneys you can look to in order to see if there is any other alternatives or other ways to lower exposure.

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Posted

Michael Avenesian the Glendale attorney has provided the best answer.

But my biggest question, is where is your attorney in all of this? He should be consulting with you (if you have asked) and providing you with some input or at least a referral to an attorney with lots of L and I specific experience.

In my experience, there can be flow through liability for some withholding obligations like premiums for L and I coverage and some portions might not be dischargeable. However, it is not always so and I have seen it be a hit or miss proposition in the state's pursuit of obligations. If it is an L and I overpayment, I generally do not see these pursued - once years and years ago I had L and I file a nondischargeability complaint for an overpayment but that was long, long ago.

I filed just short of 400 cases last year in Western Washington, so I have seen a variety of results on this point with L and I, and it seems frequently a suprise "grab bag" of results...

Now, I am currently involved reveiwing a Chapter 7 Debtor's dispute with L and I for contractor fines - the corporation was doing work outside of the area in which it carried licensure. This is playing out to the Debtors favor so far - the citations seem issued to the corporation - not to the individual owner. The state seems to be hedging and backpeddling and not commiting to whether there is personal liability being asserted against someone who was not actually cited. So far my request for a commitment to a postion (individual liabile for fine issued to corporation liable or not and under what basis) has resulted in a mountain of paperwork (like a response to discovery even though I have conducted no discovery) and no commitment.....stay tuned is all I can say.....

So I feel that Mr. Avenesian is headed down the right road in his analysis. We probably need to know some more about what type of L and I obligations are being asserted with some more specifics. The devil is in the details on this one.....

Thanks for posting in this great forum - if you need help, give a call!

James H. MaGee, Washington Bankruptcy Attorney Offices in Tacoma, Puyallup and Bremerton 253 383 1001

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