Going To Court: Securing Judgment Against The Owners Or Officers Of A Bankrupt Company

After exhausting your efforts to collect money from a customer, it is the most unenviable thing to have to pursue the matter in court. In our most recent article on B2B collections we discussed how to collect money from a customer who has gone bankrupt. In this article we will expand on that theme by briefly examining whether the owners or officers of a bankrupt company can be held personally liable for the debt owed to your business.

Firstly, it is possible that the owners or officers of a bankrupt company can be held liable for their company’s debt to you, especially if a court has found that an owner or officer(s) used the “veil” of the corporation structure to shield themselves from debt responsibility. When a court rules that such individuals are personally liable, it is called “piercing the corporate veil.”

If you’re attempting to collect money from a defunct company, you may be able to pierce its corporate veil by seeking a court judgment against its owners.  In doing so, be aware that the court will look at the following factors before ruling in your favor:

  • whether the company engaged in fraudulent behavior
  • whether the company failed to follow corporate formalities
  • whether the company was inadequately capitalized
  • whether one person or a small group of closely related people were in complete control of the company

If you intend to seek a court order to pierce a corporate veil, it is critical to retain the services of an expert business attorney.

The Jayaram Law routinely and successfully assists its clients in their business-to-business (b2b) collection needs.  We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.


If you need business debt collection services conducted in a professional manner, contact our B2B (business-to-business) debt collection law firm by calling 312.454.2859 or visiting www.jayaramlaw.com.