Commercial Division Blog

Posted: July 2, 2016 / Categories Commercial, Corporations

Officers of Dissolved Corporation Held Individually Liable for Post-Dissolution Debts

On June 23, 2016, the First Department issued a decision in Indigo Secured High Income Note, Ltd. v. HCI Secured Medical Receivables Special Purpose Corp., 2016 NY Slip Op. 05044, affirming a judgment holding officers of a dissolved corporation liable for its obligations, explaining:

The motion court correctly determined that defendants Nitsberg and Health Capital are liable for the obligation of defendant HCI Secured Medical Receivables Special Purpose Corporation (NY) (HCI-NY) to make payments due to plaintiff under a settlement agreement (SA) and accompanying promissory notes. It is undisputed that Health Capital is the sole owner, and Nitsberg is the president and sole officer and director, of HCI-NY. Further, Nitsberg executed the SA and the notes in his capacity as president of HCI-NY almost two years after that entity was dissolved by proclamation pursuant to the Tax Law. Owners and officers of a corporation that is involuntarily dissolved under the Tax Law are individually liable for the debts of the corporation undertaken while dissolved.

(Internal citations omitted).