Bankruptcy Resurgent?

The economic shutdown, and the ensuing recession, triggered by the COVID-19 pandemic have jeopardized the survival of many businesses and, in some cases, of entire industries.

Notwithstanding the Federal government’s efforts to mitigate the adverse consequences of this very challenging economic environment,[i] commercial bankruptcy filings under Chapter 11 of the U.S. Bankruptcy

In general, the creditors of a corporation cannot recover the corporation’s debts from its shareholders—the shareholders enjoy the benefit of limited liability protection as a matter of state law. Among the corporate liabilities from which shareholders are usually shielded is the Federal income tax imposed on a corporation’s taxable income.

There are a number of exceptions to this general rule, however – some of which are better known than others – including the ones described below.
Continue Reading Shareholder Liability For Corporate Income Tax?