Some one got judgment against my LLC. LLc has no assests and no bank account for the past few months. Instead I am running another LLc for same type of business. What will happen in that case/
To properly answer your question, someone would need to sit down and take a holistic approach by looking at all the facts, as well as the possible tax ramifications of any decisions. Generally, a judgement against an LLC is not a judgement against the member(s) (owners of the LLC). However, here are a few scenarios where an LLC owner (member) may be potentially liable for the judgement entered against the LLC:
1) Owner/member has signed some type of personal guarantee (a common occurrence in bank loan agreements).
2) A contract that binds an owner/member for the liabilities incurred by the LLC.
3) A regulation or statute making the owner/member personally liable. For example, it is NOT unheard of for a state to have a law that makes the X(ie. 10) number of the largest owners/members personally liable for unpaid wages owed by the LLC.
4) An involuntary Bankruptcy filing of an LLC (especially when it has one or few members) initiated by a creditor, under some type of substantive consolidation doctrine.
5) A court ruling piercing the LLC corporate veil, as well as by way of reverse piercing.
6) A substantial tax assessment/judgement against an LLC owned by one or a few owners/members.
The above are just some quick examples. The answer to your question could depend on a number of factors that were not provided in your inquiry, such as:
1) What state was the LLC formed in?
2)Does the LLC's formation state adopted RULLCA (Revised Uniform Limited Liability Company Act)?
3)Are there any fraudulent conveyance issues?
4)What is the underlying nature and jurisdictional state where the judgement was entered at?
5) Is the LLC active and in good standing?
6) Does the LLC have a proper and well drafted operating agreement?
7)How long was the judgement against the LLC entered?
8)How many owners/members the LLC have?
It may be a good idea to discuss your situation in more detail with a licensed attorney in your applicable jurisdiction (probably one with business/corporate litigation experience). I hope that was somewhat helpful.
Disclaimer: John Kiritsis a licensed Attorney in New York and New Jersey. Also, John Kiritsis earned a Certified Public Accountant(CPA) license and is authorized to represent taxpayers before the IRS. The foregoing discussion does not establish an attorney client relationship with John Kiritsis. John Kiritsis' response is qualified by the limited facts stated above, jurisdictional laws which John Kiritsis may not be familiar and/or John Kiritsis' lack of licensing to provide legal or tax advice in the appropriate jurisdiction. Avvo doesn't pay John Kiritsis or his law firm for providing answers in this site. Answering, replying and/or commenting to your question(s) doesn't form an attorney client relationship with John Kiritsis and/or his law firm . If you want to retain the services of John Kiritsis, please contact John Kiritsis. Otherwise, please don't expect a further response. John Kiritsis needs an actual written agreement to form an attorney-client relationship, as well as, a proper conflict of interest check. You shouldn't rely on John Kiritsis' answer, since different state laws may apply, the fact specific nature of your inquiry. To obtain proper and/or sound legal advice upon which one can rely necessitates retaining an attorney who is qualified in this particular area of the law. Any comments are merely suggestions for you to think about in discussing your situation with your local attorney. As previously stated, to properly answer your question someone would need to sit down and take a holistic approach by looking at all the facts, as well as the possible tax ramifications of any decisions.
It's a good question and the answer depends on a further review of the facts. There is a scenario where the creditor won't be able to do much/anything with the judgment, and there are other scenarios whether either you might personally be on the hook, or your new LLC might be. There are many considerations that could affect these scenarios, such as the basis of the judgment, the nature of the new LLC as compared to the old, and so on. It would be a good idea for you to sit down with an attorney to understand the potential exposure, if any, to you and/or your new LLC.
DISCLAIMER: This information is not and cannot be considered to be legal advice, nor does it signify the formation of an attorney-client relationship. It is merely general information that you should not rely on, unless we speak extensively in person and I explicitly inform you that I am giving you legal advice that you can act upon. Before I can represent you, I have to ensure that there are no conflicts of interest or other obstacles to representation; therefore, you should not assume that I am your attorney until we enter into a written agreement to that effect.
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