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As a former CFO of a start-up, am I responsible for start-up owner's debt? Details below

Vernon, CA |
Filed under: Business torts Business

From January 2012 to June 2012 I was employed as the CFO of a family member's start-up. Prior to May 1, 2012 the start up was a DBA. The owner had me register it as a corp on May 1, 2012.
When I joined, the firm was in a downward spiral, and as such, it is now defunct. The firm had $200,000 in accounts payable to one vendor at the time of bankruptcy. The company (a Mexican firm, if that helps) first tried suing the owner, but he declared bankruptcy. The only records of me and the company are the corporation filing documents listing me as an agent of the company. The debt was taken on before my time at the start up.
Today I received a letter from a local law firm asking me for payment on the debt. I figured it is a scare tactic, but I would like to know if I am liable in any way.


I don't know if this helps, but here are some more details: I was never officially an employee of Mi Guayabita. I was more of an adviser to MGC. As a corporation, MGC only existed from Mid april until June 2012. I never signed anything other than the incorporation as an agent. I do not, nor did I ever, have an ownership stake in the company. When the agreement started (which the founder, and only the founder) signed, the company was a DBA circa early 2011. I never presented myself as an owner of the firm, nor did I sign anything implying I was. Thank you everyone.

Attorney Answers 3


Probably not, as long as you didn't personally guarantee any debts of the company's, or do anything to expose yourself to tort liability.

For a more meaningful response, you're best off taking all the corporation's formation and operational documents to a lawyer for review, and to discuss all the details of the situation.

Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to any follow-up comments. If you want to hire me, please contact me. Otherwise, please don't expect a further response. We need an actual written agreement to form an attorney-client relationship. I'm only licensed in CA and you shouldn't rely on this answer, since each state has different laws, each situation is fact specific, and it's impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue.

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Thank you!


As long as you did not sign anything guaranteeing an obligation of the company (either when it was unincorporated or after it was incorporated) or sign anything as an individual (rather than as an officer of the company), you probably do not have personal liability. These are somewhat complex issues related to the content of any documents you signed on behalf of the company and how you signed those documents.

I would recommend that you speak with an attorney who can review all relevant documents and give you a more certain answer. From there, you would be in a better position to respond to the law firm requesting payment on the debt.

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Ms. Koslyn and Ms. Olmon are correct in saying that you should contact counsel. You apparently did not formally undertake personal liability for any business debt. And the business undertook the liability before you arrived. However, when you arrived and for about six months, there was not yet any entity separate from human beings. You benefited from the going concern and its assets, including those from Vendor. You were leadership, a principal. You may have difficult burden of persuasion on your defense that only other principal(s) are liable.

The above is meant to be valuable and not harmful. A lawyer intending to help a client or prospective client NEEDS facts. The more facts, the better. This medium, and often the question, do not promote fact gathering as well as an attorney's questions. So this answer is subject to revision based upon more facts. This response does not create an attorney client relationship and is not an attorney client communication. You should obtain advice from independent counsel of your own selection before proceeding. Visit for more info...

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