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.
Another excerpt from AVRM.
It’s been too long. But the demands of writing the draft of a new book (A Very Religious Man) made blogging impossible.
Not only that, but writing longish essays takes considerably more time than you might guess by reading them, which most certainly reflects on my ability. So just what kind of a writer am I, you ask? A slow one, apparently.
It follows that I should concentrate on shorter posts, and that’s the plan, although I can’t guarantee I won’t fall to the temptation to sermonize at length on occasion.
At any rate, the plan is to release AVRM late this year, as the second novel in the series The Remains. So there may be further interruptions, but in the end I think it will be worth it.
What made the US such a formidable factor in WWII was the size of its economy, its underutilized assets, and the ability of government to effectively organize it. It was a war not won by valour or brilliant tactics or clever code-breaking, as glamorous, inspiring, or important as those things were. The war in Europe, especially, was a war of attrition, with the Soviet Union slowly grinding up half of Germany’s military might in the east, while the US relentlessly chipped away from the west. Germany fought on, enduring inconceivable punishment without surrender, until she had nothing left to fight with, until the Allies could finally claim victory over a wasteland of burnt-out cities and a defeated population. Continue reading
Suppose for a moment that I am the head of a new trade association, funded by business firms sharing some common interests, say participants in the same industry. I have the task of hiring a law firm to represent the interests of my members in the halls of Congress, and, more importantly, in the offices of Congressional staff. Continue reading