Q: Hello, I dissolved my S corp mechanic shop through LegalZoom. It has been filed with state of CA months ago.
Vendors are serving me with lawsuits under my company name. Do I need to show up to court? I have no personal guaranties to them. If they serve me under my name, do I have to show up to court? Does the fact that it was an S corporation save me? I have not filed for bankruptcy. I was told no need because my company had no assets.
A:
The fact that it was an S corporation doesn't save you.
Ignoring the lawsuits would be a poor decision. How to respond (or not) depends on many factors. When a business is owned by only a few shareholders (or members) these individuals will often be sued individually as well. All to often, novice business owners fail to properly form and maintain their businesses. The personal protection offered to owners take much more to establish than filing the initial paperwork with the SOS, getting a EIN and opening a checking account. If you didn't use an attorney to dissolve the business, I am guessing you didn't use one to start it or maintain it. Unfortunately, the money you saved before will be needed to have an attorney address your situation and possibly represent you in these lawsuits. The corporate records are of the utmost importance in protecting your personal assets. Best to you.
A: If your dissolved S corporation is sued, the entity generally shields you from personal liability for its debts, provided you've properly maintained corporate formalities. However, if you are personally served or named in a lawsuit, it's important to respond or appear in court to avoid a default judgment against you personally. Regardless of your company's status, consulting with an attorney about the specifics of any lawsuit and potential liability is advisable.
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