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About Michael Fay
Expertise
My focus and specialty is in credit, so that the risk of the debt itself is minimized. This means understanding it, predicting it, and helping to correct it. Having worked in contracts & credit, I have also worked with all of the related documents such as Guarantees (personal and corporate), and Security Agreements (aka UCC’s or “liens” – but I caution you in using those interchangeably).

Experience
I have a broad background with more than 15 years in the credit industry. Ten years with Dun and Bradstreet, first as a field reporter creating reports, then in customer service, finally I served as the credit manager designing risk models for many national and international customers through D&B’s Outsourcing function. Five years with another publicly traded firm where I created the credit department and then served as credit manager for North America. At both companies we used both business and consumer data. You probably know that both business and personal credit have scores; what you might not know is how many different types of scores there are. I am familiar with and have used many different scores in each. Also be aware that each credit type (business & personal) is unique with different processes and different time frames. I have served on the board of directors for companies in many states and still serve in some capacity in a few. I contribute to credit publications and work with the non-profit arm of the SBA called SCORE.

Organizations
ACA International * NACM * Credit Risk Managers * SCORE (SBA)- Counselors to America’s Small Business * Payment Card Industry Network * PaymentSource.com * D&B Alumni * Psi Chi, National Honor Society for Psychologists

Education/Credentials
BIS in Business and Psychology, University of Minnesota * MBA is still in progress (on-line)

Awards and Honors
State of Colorado - State finals in Accounting and Advanced Accounting. * D&B Leadership Winner (3 times) * D&B Leadership Finalist (3 times) *

You are here: Experts > Business > Small Business Information > Business Debt > dissolving an S-Corp.

Business Debt - dissolving an S-Corp.

Expert: Michael Fay - 10/24/2009

Question
Good Day, I have an S-Corp than I have had for 8 years. I have found no alternative, do to this raw economy, to dissolve. It is a pack and ship co. My assets are minimal. approx. 1200.00. Most major equip. ie; copy machines are leased. My question is this. I have business debt that I simply can not afford to pay off and the assets are not near enough to cover the debt. I would have to early terminate my lease on copy machine amongst other debts. One in which they have already schedule a trial on. Can They come after me personally? And what happens down the road, if the economy gets better, I want to start up another S-Corp.? Can they attached the new corp? By the way, I recently had to file personal bankruptcy. I have tried to make it work. And am saddened that it had to come to this. Do you have answers or any advise. I would love to hire an attorney, however, if I could afford to do that, I could afford to pay my debts.
Kind Regards

Answer
Linda
As you probably know, your question is a legal one as well as a financial one, and I want to begin by saying that I am not an attorney. You have many questions and they are understandably interrelated.

1. Can they go after you personally?
In most cases, this is a corporate debt. But you will need to check each individual contract to identify any specifics that would change that picture. For example, is there a Personal Guaranty? - if so then it is both a personal and a corporate debt
Did you send any personal checks to pay for any of the obligations? If so, that could change the picture as well. Your personal liability could also depend upon actions you have taken in the corporate name that might have “pierced the corporate veil.” Other conditions can impact the decision including the products/ services in question and/or the amount in dispute (although those are unlikely).

2. Can they attach a new corp (or LLC)?
That is more uncertain. My advice is to file bankruptcy for the existing corporation. That is one way to close the books on this one, to distance yourself from its obligations, and to ensure a clean start at whatever point in the future you decide to give it another try. Until the “artificial person” that is your S-corp is declared dead, there is still the potential for existing liability and existing obligations that you as the owner might have (and the new business might also bear)

Probably not what you wanted to hear, but that is the most definite way to get this one behind you and make a clean start, both personally and professionally.

Best of luck,
Michael

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