Expert: Mark J. Markus- California Bankruptcy Attorney - 7/12/2007

Question
A friend of mine started a business in CA and hired me two months later.  He offerred me half the business, him taking the financal risks and me handling all the dailty operations (mostly customer service,processing orders).  Almost two years later, the business sufferred approximately $20k in online fraud and the busness had anothe $60k in debt I wasn't aware of.  Somehow, the checking account was overdrawn by $13k and now I'm being told by the friend that I owe half. What is my liability as a shareholder in a c-corp?  I did not guarantee the accout and was only signed on as a secondary party.  Same is true with some credit cards that currently house the $60k in debt.  Is bankruptcy a good option?  Do we even need to do that?

Answer
your liability depends in part on which debts you guaranteed, and the state and non-bankruptcy federal law applicable to the situation.  As a shareholder you don't usually have any liability.  If you are an officer, that's another story.   As far as bankruptcy as an option, please see http://www.bklaw.com/business_bankruptcy.html