What risks do owners/officers have when a corporation is in financial trouble?
Minneapolis Bankruptcy attorney Steven Silton discusses if owners and officers of failing businesses can be held personally liable for financial obligations.
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Similar to owners, there’s this new area of law involving deepening insolvency, which essentially indicates that when a company is in financial distress, when a company is slowly but surely not being able to pay their bills, that there can be liability for officer-directors or shareholders in that company, and that they can be held personal liable for some of the obligations that might be incurred by the corporation. So it’s very, very important to assess the financial state of a business as it stops paying its debts in a reasonable fashion, and assure that proper actions are being taken and that there are attempts to minimize the amount of outstanding obligations.