Directors and Officers Can Be Liable for Corporate Debt
Officers and Directors can be liable for corporate debt under the Texas Tax Code.
Officers and directors liability is often overlooked by collections lawyers in Texas. Everyone knows that a corporation is a good shield for liability.
Collecting debt in Texas can be tough. Normally, officers and directors are not liable for the judgment. However, whenever we take on a new matter we always check to be sure that the corporation is in good standing with the state of Texas. If a corporation or LLC does not comply with the taxation requirements, then the officers and directors can be personally liable.
Recently we took over a case for another lawyer who has filed a lawsuit against a corporation for an invoice that was past due. The debt was sizeable, over $250,000. The president in charge of the corporation was very unconcerned about the debt and was ignoring the prior lawyer. The corporation had no assets, so nothing done at that point was of any concern to the president.
Our usual process is to investigate the debtor before taking any action. After researching the this corporation, we discovered that the corporation was no longer in good standing with the state of Texas. And was not in good standing during the events that gave rise to the debt. So although the prior lawyer had filed a lawsuit against the corporation, he did not include the officers and directors in that lawsuit. The first order of business for us was to add the officers and directors to the lawsuit. Once we had amended the lawsuit to include the officers and directors, the debtor requested mediation. We went to mediation and settled the case within a few days.
Being a collections lawyer in Texas can be tough, but there are tools available to make it just a little easier.