Q: Can my s corp/llc be sued bc a former biz partner owes money from previous business? My business is named in the suit
I started an s corp with 2 other equal partners in Feb 2020. Myself and another partner bought the 3rd partners shares in March of 2021. The partner that was bought out was just sued by a vendor of his that he dealt with in his previous business. The person is alleging that my former business closed his previous business and started a business with my other partner and I so that he could conveniently default on his past debts by closing that business. So now my current business is also named in the lawsuit. The current business does have a similar name to the former business partners previous one so that we could maintain a familiarity in dealing with customers. I did not know about this situation before partnering. Is there any threat to my current business despite it being new and not even having that previous partner as part of it anymore?
A: Possibly. It sounds like the plaintiff is trying to allege some type of tortious business interference and conspiracy with your new business and your former business partner. This scenario where a person closes down a business to avoid debts and then opens a new business does occur. While your business may not have been involved in this scheme, the plaintiff does not necessarily know that. You really need to have an attorney review the complaint and discuss with you. Because your business is being sued, you have to retain an attorney as opposed to representing the business yourself. I'm sure anyone who responds would be happy to help. Good luck.
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