Suing a defunct business that owes you money can be a challenge. However, a lawsuit may still be possible to commence a lawsuit against a business that no longer exists. While these matters are legally complex, having a knowledgeable business attorney is important to help ensure the best possible outcome in your case.
Below are the general steps to take to sue a defunct business in New York:
1. Determine the Company’s Legal Status
The first step is determining the legal status of the business. Determining the legal status of the business can be done by checking the New York Department of State’s Division of Corporations database. By researching on the database, you can find out whether the business is still active, has been dissolved, or is inactive. If a business has begun wind-up procedures and has not yet formally been dissolved, that business legally exists and can be sued. Even if the company is defunct, the owners, officers, and directors may still be liable in cases involving commingling of funds, fraud, or other wrongdoing.
2. Identify the Defendants
If the business is still active and has remaining assets, you may sue it to recover the funds you are owed. Whether you can pierce the corporate veil and begin a case against individual shareholders will depend on whether the company has been dissolved properly or not.
3. File a Claim and Serve the Defendant
After you have determined the company’s legal status and determined specifically who you should sue, a claim must be filed in court against the company. A skillful business attorney can help you to prepare the summons and complaint, which must include the facts of the case, the legal grounds for your claim, and the relief you are requesting from the court.
The complaint must be filed and served on the defendant. Even if the business is defunct, you may serve the papers upon the last known registered agent — or the Secretary of State. If you are suing individual owners or shareholders, they must be personally served.
4. Proceed with the Legal Process
Once the summons and complaint have been filed and served, the defendant has a certain amount of time to file an answer. After the pleadings stage, the legal process in a business lawsuit involves these phases:
- Receive a responsive pleading
- Conducting discovery
- Depositions
- Negotiations
- Motion practice
- Trial preparations
- Settlement or trial
If the business or any of the named defendants do not respond to the lawsuit, you may be eligible to obtain a default judgment. A default judgment lets you move forward with obtaining the relief you requested in the complaint — and obtaining any remaining assets to which you are entitled.
5. Collecting on the Judgment
Obtaining a judgment is one thing — collecting the assets you are owed can be difficult. You will need to identify any assets that remain from the defunct business, which may include bank accounts, real estate, or other property. If the dissolved company has not yet completed the windup process and assets remain, the judgment collection action can proceed against the business. Sometimes, enforcement mechanisms such as bank levies or property liens may be used to collect a judgment. You might also make a claim directly against the insurance company for the business.
Contact an Experienced New York Business Attorney
If you’re seeking to sue a defunct business, it’s important to have an experienced business law attorney by your side who can assess your case and work to obtain the best possible outcome. Offering skillful representation and high-quality legal services, Brinen & Associates assists clients with a wide variety of business litigation matters. Call (212) 330-8151 or send us a message to learn more about how we can assist you.