What NOT to do at a Job
A story I heard yesterday from one of the partners:
Many states have laws against a corporation making an illegal distribution. In other words, money can not flow from the corporation to its shareholders unless there is more than enough assets to pay off creditors . To give the law teeth, if a corporation does make an illegal distribution, than the board of directors can be liable to the creditors.
Many years ago, an attorney I know was a partner at a different law firm. He was also on the board of a Virginia Corporation which had gone bankrupty. At 4:30 p.m. on a Friday, an associate put on his desk a memo saying that all the directors of this corporation would be liable, under Virginia Law, for 20 million dollars. Then the associate went home. Five minutes later, the partner read the memo, and started freaking out. Couldn't find the associate. Couldn't find anything in the firm's law library about Virginia Law. So he went to the county law library, and found the statute. Turns out that the partner would only be liable if he was a citizen of Virginia. On Monday, he almost fired the associate for the scare.