If an LLC files for bankruptcy, can former clients go after owners personal assets?

Asked about 5 years ago - Florida

I am a partner in an LLC and we don't have any income for past 2 years. A former consultant suing us for the money not paid for work done 3 years ago. The prime vendor didn't pay us and told us that they won't pay for few months of that consultant's work because of non satisfactory performance. Can filing bankruptcy of our LLC save us from this case? Also, I am the only partner(10%) of that LLC in US and other 2 partners are outside US. Would this affect my personal credit or my spouse's credit? Can the former consultant go after my personal assets?

Attorney answers (1)

  1. Lev Martyniuk

    Pro

    Contributor Level 11

    Answered . If the LLC has had no income for the last 2 years why would you care if the LLC has a judgment against it? The creditor would, absent fraud, self-dealing, etc., only be able to go after the assets of the LLC to satisfy the judgment.

    You say you are one of many members so single member LLC liability issues would have no play. The only big issue is whether the LLC has any assets. If it has assets then that's really different and your approach would be too.

    I would not file bankruptcy for the LLC if it has no assets and money. If the LLC did file bankruptcy for some reason you would not have personal exposure on the debts (absent many facts about its operation and whether you guaranteed any of its debts), and this would not be reported as a personal bankruptcy unless you signed a guaranty that you did not or would not want to honor.

    Go speak to a corporate lawyer in FL regarding this.

    Good luck.

    Disclaimer: I am offering this information for educational purposes only. I am not your attorney. You should speak to a lawyer in your state.

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