Our firm recently was successful in arguing against the appeal of a decision that granted our client Judgment against the officers & directors of a company we had obtained a previous Judgment against, as well as all the other corporations they were using to carry on their business.
For those interested in the complete text, please contact me via email for the citation.
In plain English (as opposed to lawyer speak) the case is important because it found that a debtor corporation cannot simply close its doors because someone has a Judgment against it.
This is not to say that a corporation cannot make an assignment into Bankrutpcy: that is always possible.
Many smaller companies, “Mom and Pop” companies if you will, often try to avoid the expense of a Trustee and simply close their doors, open a new company, and carry on as if nothing has changed. The case says you cannot do that if doing so would defeat the reasonable expectation of a creditor that you will continue on business to pay off the Judgment after one is obtained against you.
The case also found the officers and directors personally liable, thereby exposing their personal assets to seizure, as they were found to be the directing minds who directly benefited from the movement of assets to themselves and their other companies.
The decision is an important win for people concerned that a small company may simply open its doors under a new name if a Judgment is obtained against it. While you cannot stop someone from doing this, you can ultimately obtain a Judgment against them that may target all of their assets and encourage them to pay the Judgment.