The Problem Of Suspended Corporations In The Present Economic Downturn
February 21, 2012
By: John H. Podesta
Insurance Thought Leadership
Excerpt from, "The Problem Of Suspended Corporations In The Present Economic Downturn." For the full article, please visit Insurance Thought Leadership.
Corporations that do not pay their state taxes may be suspended in California.1 Once suspended, a corporation effectively finds itself in a legal coma from which it can neither defend nor prosecute civil actions during the pendency of its suspension. In the context of a complex civil lawsuit, the limitations placed on a suspended corporation that is a party to the suit present unique circumstances for all concerned. For example:
The purpose of this series is to discuss some of the issues that arise when a suspended corporation is a party to a lawsuit. First, this series will explain what a suspended corporation is, and how suspended status differs from bankruptcy and dissolution. Second, it will discuss the implications of and options for dealing with an entry of default judgment against a suspended corporation. Third, it will address the risks and issues involved in representing a suspended corporation. Fourth, it will address the issues and problems that can arise when a suspended corporation's insurance carrier intervenes in a lawsuit to which the suspended corporation is a party.
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