On November 19, 2021, Justice Platkin of the Albany County Commercial Division issued a decision in State of New York v. Spectra Eng’g, Architecture & Surveying P.C., 2021 NY Slip Op. 51119(U), holding that shareholders of a dissolved corporation can be held liable for the corporation’s debts, explaining:
The Individual Defendants argue that . . . liability cannot attach under Business Corporation Law (“BCL”) § 1006 because the State was not a creditor of Spectra at the time of the corporation’s dissolution, no assets of Spectra were distributed, and the State may not rely on BCL § 1006 to challenge pre-dissolution conveyances.
The State recognizes the Individual Defendants’ lack of contractual privity, but contends that Shafer and LaFleur may be held liable for Spectra’s contractual liabilities under BCL § 1006 as the former shareholders of the dissolved corporation.
It is well settled that a dissolved business corporation may sue or be sued for pre-dissolution obligations.
Thus, a corporation undergoing dissolution continues to exist for the purpose of and for as long as is necessary to satisfy and provide for its debts and obligations and it may sue or be sued on these obligations until its affairs are fully adjusted. After dissolution, shareholders who have received distribution of remaining assets of the corporation hold these assets in trust for the benefit of creditors.
Normally, a creditor must exhaust his or her remedies against the corporation by obtaining a judgment against it and having it returned unsatisfied. Where this is impossible or futile, an action may be maintained directly against the directors or shareholders to the extent that they received from or continue to hold assets which were the corporation’s.
In seeking to establish the inapplicability of the foregoing theory of recovery, the Individual Defendants first argue that the State was not a creditor of Spectra’s at the time of its December 2018 dissolution . . . .
The Court does not find this argument to be persuasive. Case law makes clear that corporate liabilities include contractual obligations and contingent claims, and the State possessed a contractual right of action against Spectra for overpayments at the time of the dissolution. And given that the Contract contemplates a final audit based on financial records for the calendar year in which the final bill is accepted by the State’s representative, the Court is unconvinced by the Individual Defendants’ position that they could not have anticipated a post-dissolution claim. Defendants’ invocation of laches fails for essentially the same reason.
The Individual Defendants further argue that no assets were distributed to them at the time of Spectra’s dissolution. Relatedly, Shafer argues that he was not a shareholder or director at the time. As the State observes, however, it has not had the opportunity for discovery, and information concerning the distribution of Spectra’s assets and the relationship between and among Spectra and the Individual Defendants lies largely in the exclusive possession of defendants. Under the circumstances, the Court finds this branch of defendants’ motion to be premature under CPLR 3212 (f).
Finally, to the extent that the State is challenging the pre-dissolution conveyance of Spectra’s assets, the Court agrees with defendants that such claims fall outside the scope of BCL § 1006.
Based on the foregoing, the Court finds that the Individual Defendants have not demonstrated their entitlement to the dismissal of the contractual claim.
(Internal quotations and citations omitted) (emphasis added).