Caveat Texas

A holder of shares…may not be held liable to the corporation or its obligees with respect to:

(2)  any contractual obligation of the corporation or any matter relating to or arising from the obligation on the basis that the holder…is or was the alter ego of the corporation[,] or on the basis of actual or constructive fraud, a sham to perpetrate a fraud, or other similar theory…

Texas Business Organizations Code

Small business owners in Texas have a long history of putting their corporations into bankruptcy and walking away when they get into trouble, only to start up another corporation in the same line of business right down the street, minus those annoying creditors. This is the risk you assume when you do business with a corporation – at least that’s the theory. Good luck finding anyone dumb enough to do business as a proprietorship.

But it’s outrageous when owners are able to strip their corporation of its assets before throwing the thing under a bus. Bankruptcy law is supposed to prevent this sort of thing, but I guess if you’re smart enough to loot your corporate coffers at least 90 days before the thing is forced into bankruptcy, you get a pass. But if you do that, it’s hard to argue you didn’t know your business was faced with some big obligations, and that you had no intention of meeting them.

I don’t know about other states, but caveat Texas. Be careful who you do business with.

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