Debt Incurred Against Corporation

[ldstone57]

What is the name of your state (only U.S. law)? Virginia

My father started a small corporation several years ago. A former employee of that corporation began leasing the facility from my father last year. Prior to that, this employee had been "running" the business and draining my father's savings (my father had "retired," but was still funding the corporation). So, dad decided to lease the facility to the former employee and get out of his losing proposition - so he stopped "funding" the business. My father did not close the corporation because it still owes him money.

I just saw a collection letter addressed to the former employee & the name of the corporation. It appears he has incurred about $20K in debt - which remains unpaid - in the name of the corporation. I assume he was using the name, because the corporation had established credit with this company. To my knowledge, he has never been an officer of the company. I also suspect the company trying to collect the money assumed he was acting in his original capacity as they dealt with my father for years.

Is my father (or the corporation) liable for this debt?>

 

[LdiJ]

What is the name of your state (only U.S. law)? Virginia

My father started a small corporation several years ago. A former employee of that corporation began leasing the facility from my father last year. Prior to that, this employee had been "running" the business and draining my father's savings (my father had "retired," but was still funding the corporation). So, dad decided to lease the facility to the former employee and get out of his losing proposition - so he stopped "funding" the business. My father did not close the corporation because it still owes him money.

I just saw a collection letter addressed to the former employee & the name of the corporation. It appears he has incurred about $20K in debt - which remains unpaid - in the name of the corporation. I assume he was using the name, because the corporation had established credit with this company. To my knowledge, he has never been an officer of the company. I also suspect the company trying to collect the money assumed he was acting in his original capacity as they dealt with my father for years.

Is my father (or the corporation) liable for this debt?>

If your father didn't sign personally for the debt, and its in the name of the corporation, then your father is not personally liable.

 

[Mass_Shyster]

I suspect the creditor had no knowledge of the change in circumstances, and therefore continued extending credit, as it had in the past, based on the word of the agent. If this is the case, the corporation is likely liable for the debt.