My corporation was suspended by the State of California for failure to pay corporate fees and taxes. Now the corporation is being sued. Can a suspended corporation apply for bankruptcy (Chapter 7)? Or does it's suspended status mean the corporation can't even file for bankruptcy?
No, a suspended corporation cannot file for bankruptcy. Additionally, the filing of a petition on behalf of a suspended corporation is a criminal offense.
Revenue and Taxation Code § 19719. (a) Any person who attempts or purports to exercise the powers, rights, and privileges of a corporation that has been suspended pursuant to Section 23301 or who transacts or attempts to transact intrastate business in this state on behalf of a foreign corporation, the rights and privileges of which have been forfeited pursuant to the section, is punishable by a fine of not less than two hundred fifty dollars ($250) and not exceeding one thousand dollars ($1,000), or by imprisonment not exceeding one year, or both fine and imprisonment.
I am licensed in California only and my answers on Avvo assume California law. Answers provided by me are for general information only. They are not legal advice. Answers must not be relied upon. Legal advice must be based on the interplay between specific exact facts and the law. This forum does not allow for the discussion of that interplay. My answer to any specific question would likely be different if that interplay were explored during an attorney-client relationship. I provide legal advice during the course of an attorney-client relationship only. The exchange of information through this forum does not establish such a relationship. That relationship is established only by personal and direct consultation with me followed by the execution of a written attorney-client agreement signed by each of us. The communications on this website are not privileged or confidential and I assume no duty to anyone by my participation on Avvo or because I have answered or commented on a question. All legal proceedings involve deadlines and time limiting statutes. So that legal rights are not lost for failure to timely take appropriate action and because I do not provide legal advice in answer to any question, if you are an interested party you should promptly and personally consult with an attorney for legal advice. Also, see Avvo's terms and conditions of use, specifically item 9, incorporated by this reference
12 lawyers agree
I agree with Mr. Daymude, a suspended corporation cannot apply for bankruptcy.
Our replies to Avvo questions should not be considered specific legal advice to any individual, and no attorney-client relationship is formed with you. Our aim is to provide general principles that may be useful to the Avvo community as a whole. You should seek individual legal advice pertaining to your specific factual situation, and the laws applicable to your jurisdiction. Moore & Moore Attorneys at Law -- firstname.lastname@example.org
8 lawyers agree
Chapter 7 Bankruptcy Attorney
It is generally known that it is a bad idea to file a Chapter 7 for a corporation because corporations cannot obtain a discharge. More likely than not, you may have personally guaranteed the corporation's debts, so you may have to look at the unfortunate option of filing a personal bankruptcy.
Hope this perspective helps!
10 lawyers agree
Unless you revive the corporation (remove its suspension), it cannot (a) defend the existing suit or (b) file a bankruptcy action.
Please see the post at the link below.
This information does not constitute legal advice and does not establish an attorney-client relationship.
6 lawyers agree
The simple answer is that unless you file a 'revivor' with the Secretary of State's office a suspended corporation is just that suspended, and unable to do business. Once the 'revivor' (might be a different name presently) is filed and the back fees and penalties or other issues are resolved then your company can again do business as a company in California.