Introduction
One of the primary concerns of any entrepreneur is the law that governs corporate and individual liabilities when doing business. It is imperative for a business person to minimize risks and protect themselves against becoming responsible for company debts. In other words, entrepreneurs and shareholders draw a clear line between personal and business liabilities. The case between We-Ship and Goodboy takes place in this context – We-Ship sued the latter, but Goodboy believes that he is not responsible for his company’s debts. The court will rule in favor of We-Ship because of several violations made by the director.
Possible Outcomes
Business owners are not usually liable for the debts of companies they operate. However, there may be certain cases when an owner is personally responsible for the company’s liabilities (“Who is Responsible for Business Debt?”). For instance, if a company faces liquidation, and debts should be paid to creditors, the sole owner of the business may be forced to repay the debts (“Who is Responsible for Business Debt?”). Currently, the Florida Fruit Growers Cooperative has two shareholders – Ray Goodboy and Ed Smith. This fact may suggest that Goodboy should not be personally responsible for the liabilities. However, it is important to note that the corporation has not paid any dividends to the shareholders, which may result in an insolvency procedure. During this process, the court may require both or one of the directors to repay the debts.
There is another possible outcome of these court proceedings involving the Florida Fruit Growers Cooperative and We-Ship. The case indicates that Goodboy has been receiving at least 75,000 dollars per year, although the company has not been able to pay any dividends to the shareholders. No information was provided about why Goodboy has been given this amount, but the court may rule that Goodboy misused the company’s financial resources instead of paying for the debt. There is a possibility that the director will be forced to return the money to the company, which can later be used to pay We-Ship.
When an individual is a sole trader, then the company’s debts are their personal liability. To avoid this underpinning, Goodboy decided to introduce another shareholder and director to the company. There are, however, no meetings that indicate directors have ever met. Also, Ed Smith has not received any salary or dividends, and there is no proof that Ed Smith is aware of him being a director at the Florida Fruit Growers Cooperative. Without proving Smith’s participation, Goodboy cannot make claims about not being the sole owner and operator of the business. If Ed Smith fails to confirm his participation, then Goodboy will have to personally pay for all of the company’s debts, as he is the only trader.
Conclusion
In summary, it can be concluded that Goodboy has severely misused the company’s financial resources. When the corporation had no profit, he received at least 75,000 dollars annually, which could have been used to pay for the company’s current liabilities. The court will rule in favor of We-Ship, and Goodboy will have to pay the debt. First of all, it seems that he is the sole owner because there are no proof that Ed Smith participates in this business. Also, Goodboy may face additional charges, such as theft, because he has been receiving money from the company when it was not supposed to pay dividends.
Work Cited
“Who is Responsible for Business Debt?” Clarke Bell, 2014, Web.