No, I do not think the judge is going to dismiss the case, even if the CEO was lying. You don't state the procedural context in which the case is pending, but most likely, the court will ultimately grant a judgment in favor of the plaintiff and against the CEO defendant, since inability to pay would not be a viable defense.
After obtaining a judgment against the defendant, it will probably be necessary to file a new/separate lawsuit for fraudulent transfer/fraudulent conveyance in order to collect on the judgment. A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.
This appears to be a business litigation question, not an "incorporation" question. You have not provided enough information to determine what a judge might decide to dismiss the case.
You need to consult with an atttorney who engages in business litigation and get a legal opinon. Avo is not the place of an answer to this type of questioin.
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Cases don't get dismissed because of an inability to pay a judgment. And in CA, judgments are good for 10 years, renewable for another 10, and they accrue post-judgment interest at the rate of 10%, so this isn't a viable defense strategy.
You provide no facts about the substance or merits of the case, That's what determines whether the plaintiff's case survives or not.
If you're the plaintiff, see a business litigator to get your case on track and collect any judgment you end up getting. It may be appropriate to seek pre-judgment remedies now, such as attachments of property, but that's for your own lawyer to decide.
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