Questions about unpaid business debts

[Zhariak]

Hey guys, so here's a question.

I'm going to be seeking legal advice on this fairly quickly (just had no time)... I thought I would post this here first to see if any of you beyonders have had any experience with this (just so I know how complicated this is going to be an how much its going to cost me in the end, lol. I am willing to spend a fortune on this).

Let's say you own a business. Your company does some work for Company X. Company X runs out of money and sells all their assets to a new company that is starting up under an almost identical name (ALMOST, it's not identical). Instead of selling the businesses shares (it's a private company, but for your people that know this, you know what I mean), they just sold the assets of the old company to the new company, changed the name of the old and dissolved the old incorporation.

Am I going to be able to get the money back owed from the company that purchased all the stuff?

Keep in mind I am willing to spend some serious dough on this as I am willing to prove a point. However if it's not recoverable then I don't want to spend a bunch of money on a lawyer just to tell me it's impossible.

Thanks guys!


P.S. To add on to this, the first corporation never claimed bankruptcy. Just did a legal name change to a numbered company (confirmed), and then dissolved (still waiting for confirmation on dissolution).

[Zhariak]

One more thing to add is I do have a bunch of experience in small claims, but I've never dealt with the selling of assets game.

[bubbley]

hmm doesnt the new company assume all assets and debt as well?

[FraserB]

Originally posted by bubbley
hmm doesnt the new company assume all assets and debt as well?

This is my understanding as well, it should be easy to prove what has gone on.

[gretz]

This "new company".... has it completly traded hands to a different owner all together? Were the assets of the old company (that went to the new) items that have money still owing on them from your businesses work done?

[Zhariak]

Normally taking care of this would be a peice of cake, however the new company just purchased the assets. And has a different name (like I said its similiar, but not exact).

I just know in small claims with corporations you have to be careful, little screw ups can give you the ultimate "your suing the wrong people" and it gets dismissed.

[Zhariak]

Also I provide services (so there was no resale or sale of any physical goods, just services).

[Zhariak]

Originally posted by bubbley
hmm doesnt the new company assume all assets and debt as well?

If the company shares were sold and the directors were changed to the new owner from old, then this would be true, but unforunately, they just sold the assets.

[CUG]

Originally posted by Zhariak


If the company shares were sold and the directors were changed to the new owner from old, then this would be true, but unforunately, they just sold the assets. I think the guy is out of luck, unless the old corporation turned into a holdings company, then you might be able to handle it. If it's big dollars, you're suing the old managing directors/partners/shareholders/owners. I suspect they sold in this fashion so as to avoid people like you.

[Weapon_R]

Could it be said that the new company simply bought available assets from a failing corporation?

I doubt you'll be able to get the money. The old company wasn't sold to the new one. It was dissolved and the directors are not liable for the debts of the old corporation.

[Zhariak]

Originally posted by CUG
I think the guy is out of luck, unless the old corporation turned into a holdings company, then you might be able to handle it. If it's big dollars, you're suing the old managing directors/partners/shareholders/owners. I suspect they sold in this fashion so as to avoid people like you.

That's exactly what's going on...

I can't sue the old owner because the corporation is dissolved, and the whole limited liability thing came into play.

It's just funny because they have ALL the same employees (plus a few new), same website, same logos on the work vehicles, etc... I've got pictures and everything, they even have the old company logo printed on them, lol. What makes it worse is the old owner is an employee of the new company. lol

[CUG]

Originally posted by Zhariak


That's exactly what's going on...

I can't sue the old owner because the corporation is dissolved, and the whole limited liability thing came into play.

It's just funny because they have ALL the same employees (plus a few new), same website, same logos on the work vehicles, etc... I've got pictures and everything, they even have the old company logo printed on them, lol. What makes it worse is the old owner is an employee of the new company. lol He's not liable at ALL for the corp's old debts. I'm sorry man.. unless you can prove something in criminal courts.. I don't know

[Zhariak]

Thanks anyways guys! This is going to prove to be quite the pain in the ass to deal with.... lol

Hopefully it won't cost too much for a lawyer to tell me the same, lol.

[Legless_Marine2]

Originally posted by Zhariak
Hey guys, so here's a question.

I'm going to be seeking legal advice on this fairly quickly (just had no time)... I thought I would post this here first to see if any of you beyonders have had any experience with this (just so I know how complicated this is going to be an how much its going to cost me in the end, lol. I am willing to spend a fortune on this).

Let's say you own a business. Your company does some work for Company X. Company X runs out of money and sells all their assets to a new company that is starting up under an almost identical name (ALMOST, it's not identical). Instead of selling the businesses shares (it's a private company, but for your people that know this, you know what I mean), they just sold the assets of the old company to the new company, changed the name of the old and dissolved the old incorporation.


I heard that Board Doktor/Winterco pulled this magic trick about 7 years ago and put several of their suppliers out of business.

It's likely not fightable, but depends to some degree of the business/accounting savvy behind the person in charge of Company X's little disappearing/reappearing act.

[AndyL]

Happens semi-regularly in construction - smaller GC just magically dissapears; and re-appears the next day with 2007/2008/2009 behind the name...

Don't believe the corp. lawyers have ever managed to recoup anything in these cases...

[J NRG]

.

[Weapon_R]

There is a way to pierce the corporate veil and hold directors personally liable if you can show that the corporation was a sham or that it was used to defraud a party.


" The court will, in limited circumstances, breach the corporate veil to impose personal liability for corporate acts on the directors or shareholders. The courts will do so if the corporation is a sham or used as a cloak, is formed for the express purpose of doing a wrongful or unlawful act, is a vehicle for fraud, or is an agent for the controlling operator or if a subsidiary and a parent are de facto one corporation. The controlling director or shareholder may also be liable for breach of trust or tort such as negligent or fraudulent misrepresentation and conspiracy.

James v. Oraas, 2005 ABQB 539