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Can you sue a business that closed?

On Behalf of | Jan 30, 2025 | Business And Commercial Litigation

One hurdle you might find yourself facing is when you are owed money by a business that has closed. How can you collect the amount due if that business no longer exists?

For instance, perhaps you are a business owner working with a parts supplier. You order $100,000 worth of supplies to keep your production line running, but the business never delivers your order. As you begin looking into it, you find that the business has gone under and closed its doors, making it impossible to contact them—and explaining why you never received the supplies you ordered.

This causes significant financial harm to your business. Your production numbers plummet, and you have lost the money that you originally sent to the now-defunct business. Can you still sue?

Was the business dissolved properly?

One question to ask is whether the business owners took the correct steps to legally dissolve their business. In some cases, such as with a sole proprietorship, the business owner may unofficially shut things down. But if they didn’t take the proper legal steps, the business entity may still exist and could be sued.

One other hurdle you might encounter, however, is that even if you can sue the business, you may not be able to collect what you are owed. Perhaps the business owner has no funds and has already liquidated the assets. You may still be able to collect in some situations, such as if they declare bankruptcy and you are entitled to a portion of the proceeds from those assets, but the process can be complicated. At a time like this, be sure to carefully explore all of your legal options.