Successor Corporate Liability - Can an Insolvent Corporation Shut Down its Doors, Re-Open Under a New or Similar Name and Continue Business as Usual?
In this post I briefly discuss the standards by which New Jersey Courts are to apply in determining whether a corporation is the successor-in-interest to, or alter-ego of, a previously existing but defunct corporate entity. The issue often presents itself when an insolvent closely held corporate entity (such as construction companies or other privately held small businesses) looks to rid itself of trade debt without effectively shutting down the business and losing valuable assets, customers, contracts or good will. Unscrupulous business owners may attempt to accomplish this seemingly impossible feat by engaging in fraudulent asset transfers - essentially taking the assets from the debt-ridden business and transferring them over to a new business often established under another family member's name without paying anything to the former business - intended to avoid creditors. My firm is presently pursuing this exact claim in a matter c...