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I am an inactive stockholder of a closely held corp. Am i responsible for debt created by the corp?

Lynchburg, VA |

The corp is not doing well and owes the bank and other venders. the bank wants to call in the loan.

Attorney Answers 2

Posted

Look at the articles of incorporation and also the accounts for which debt is being incurred. if you did not sign for any of the accounts and you have acted in good faith without spending any of the corporate money on personal expenses, you should be ok

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Posted

In general, a person is not liable for debts that they did not sign.
The situation is not as clear as other lawyers might say, because not all signatures look the same.
You need to be sure that the loan documents creating the debt are either not signed by you at all, or are signed by you only in your corporate capacity.
This is not always easy to tell.
Also, if there are shenanigans with the bookkeeping there could be problems for you.
As long as all of the above are not problems, you have no liability. But that doesn't mean that they won't look at you anyway.
You should seek counsel now to start thinking about this to protect your interests.

Mr. Krumbein is admitted to the courts of Virginia. His advice is often based on Virginia and Federal law, however, you should consult a lawyer in your geographic area for more detailed advice.

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