Case Scenario: Corporate Formation and Shareholder Liability
Ronald Powers, a well-known local entrepreneur, owned several businesses that filed for bankruptcy from 2010 to 2015. Last year, Powers established R. P. Properties, Inc. Powers is the sole shareholder and invested $2,500 in the company as a capital contribution. R.P. Properties, Inc. purchased 4 houses using a $600,000 loan obtained from the bank. Powers planned to fix up the homes a little and give renters a break on the rent if they agreed to do some repairs. R.P. Properties skipped several mortgage payments on the houses even though his tenants paid the rent. R.P. Properties is no longer able to pay its bills. As one of R.P. Properties' creditors, you seek to hold Powers personally liable for the debts of the company.