COMPANY LIABILITY OR PERSONAL LIABILITY?

When a person wants to get into business, he or she can do business as an individual, or set up a different legal entity separate from him or herself to do the business. The separate legal entity does and operates the business, borrows money, executes contracts and does whatever is required of the business without involving the individual person who decided to set up the separate legal entity. 

The separate legal entity is treated as the owner of the business and files it’s own tax returns. Yes we are talking about corporations. There are different kinds of corporations that can be set up. There are “C” corporations, “S” corporations and limited liability companies aka “LLC”. All corporations assume their own liabilities, which are separate from the individual person. This is the general rule unless the corporate veil can be pierced to reach the individual.

How does this play out in real life? Let’s discuss an actual client example. Client wanted to get into the restaurant business. To do so, he incorporated an “S” corporation, which only has one stockholder, himself. The corporation was established in 2019, a year before the start of the pandemic, that has already killed a million Americans. Hopefully, most of the deceased have found their way to paradise, to spend eternity with our God. We rely on the infinite mercy that pours out of the sacred heart of Jesus Christ, to lead the souls of those who have departed to heaven, for the sake of His sorrowful passion. Thank you Jesus, for your most sorrowful passion that has opened the gates of heaven to us sinners who seek your forgiveness!

Let’s call the corporation of client hypothetically, Z restaurant. Client, as president of Z restaurant, signed a 5-year commercial lease at $10K a month. This translates to $600K for 5 years of rent. For the entire year of 2019, Z restaurant was able to pay landlord $120K of rent pursuant to the lease agreement. However, in 2020, Z restaurant was able to pay only two months or $20K. Then, Z restaurant obtained a PPP loan $100K so it could continue operating at a loss, hoping against hope, that the pandemic would just go away after a couple of months. 

Z restaurant stopped operating in January of 2021. The restaurant owes 4 years of unpaid rent, which is roughly $500K. It also owes $100K of PPP loan. So Z restaurant owes a total of $600K. Who is liable for this $600K of debt? Is it Z restaurant by itself, or is client also personally liable for the $600K since he is the only stockholder of Z restaurant? To make matters worse, on the day before the restaurant closed for good, a customer slipped and fell in the restaurant from a spilled drink on the floor. Customer incurred $200K of medical expenses so now sues client for $500K including pain and suffering and loss of income. Customer was a surgeon making $1.0 M a year and was unable to work for half a year. Z Corporation had no liability insurance. Is client, as an individual, liable to the surgeon for $1.0M?

Fortunately for client, a corporation is treated as a separate legal entity from the individual stockholder. Hence, as a general rule, only Z corporation is liable for the $500K unpaid lease, for the $100K PPP loan, and the $1.0M damages that the surgeon is asking for. Client as an individual has no personal liability for any of these liabilities incurred by Z Corporation. Then, Z Corporation should just file for Chapter 7 liquidation bankruptcy where the $1.6M of claims against Z Corporation will be filed. 

PRAYING ALWAYS HELPS

It also helps to pray to our God, Jesus and the Blessed Mother Mary for divine protection against the virus, and financial problems, because we have a God who loves us and showers us with infinite mercy. All we have to do is humble ourselves and pray.

What is the current proof that God and Jesus are divine and all powerful? I refer you to exhibit A, the incorruptible body of Carlo Acutis!

CURRENT ONGOING PHYSICAL PROOF GOD IS ALMIGHTY 

INCORRUPTIBLE BODY OF CARLO ACUTIS DIED 2007 AT AGE OF 15

Look at the incorruptible body of the blessed Carlo Acutis who died at 15 in 2007. You can look at his body in Rome, Italy, now 14 years after his death. He looks like he’s just asleep in his jogging suit and rubber shoes!  That is a perfect example of an ongoing sign on earth that the God of Moses, our God, my God, is almighty and all-powerful that He even suspends the natural laws of biology and physics without any effort. He resurrected His one and only beloved son from death on the cross. Indeed, He has power over death.

I have actually thought, “What would the other religions believe if they actually saw the incorruptible body of the blessed Carlo Acutis? I think even Buddha, if he were alive today, would truly believe that Yahweh is the one True God.” No need to think about reincarnation and nirvana because his incorruptible body is available for all to see in Rome, Italy. We won’t need any kind of explanation on the efficacy of modern day mummification. Come on, man, that’s all bull. The truth is in plain sight. Believe your own eyes, that the one true God is all-powerful and His name is Yahweh, “I am who am.” He is the alpha and the omega, the beginning and the end.

Seven of my high school classmates passed away in 2021. They have all gone to meet their creator. I would like to mention their names here: Ricardo A, Victor Y, Jerry L, George C, Jimmy G, Edward N and Ricardo D. Three died of co-vid, one slipped and fell in the bathroom, one of heart attack, two of cancer. I pray all of them are in heaven with our Lord enjoying eternity with their loved ones as they must have all relied on the infinite mercy overflowing from the Sacred Heart of Jesus who died for us to redeem us, for the sake of his sorrowful passion.

Disclaimer: None of the foregoing is considered legal advise for anyone. There is absolutely no attorney client relationship established by reading this article.

“ETERNAL FATHER, WE OFFER YOU THE BODY, BLOOD, SOUL AND DIVINITY OF YOUR BELOVED SON, JESUS CHRIST, IN ATONEMENT FOR OUR SINS AND THOSE OF THE WHOLE WORLD, FOR THE SAKE OF HIS MOST SORROWFUL PASSION.”

Lawrence B. Yang is a graduate of Georgetown University with a Master’s Degree in Law and specializes in Bankruptcy, Business, Real Estate and Civil Litigation.  He speaks English, Mandarin and Fujian and has successfully represented thousands of clients in California, including companies overseas.  Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 20274 Carrey Road, Walnut, CA 91789 or1000 S. Fremont Ave., Mailstop 58, Building A-10 South Suite 10042, Alhambra, CA 91803.