When a business owes money, creditors sometimes worry that the company will simply close its doors and disappear. In Florida, it’s not uncommon for struggling businesses to shut down.
Can they legally do this to avoid paying what they owe?
Is this a common practice?
Some businesses close in order to avoid collections or lawsuits and escape financial obligations. This can be a tactic to delay payments or complicate a creditor’s ability to recover what is owed.
However, closing does not automatically erase a company’s debts. A dissolved business may still have assets or outstanding obligations. In some cases, creditors can pursue those assets or challenge the way the business closed if it appears to be an attempt to defraud creditors.
What Florida law says about business dissolution
Under Florida law, a business that dissolves must wind down properly. This includes notifying known creditors and allowing them to submit claims. If the business skips this process or transfers assets improperly, creditors may be able to take legal action.
Florida also allows creditors to challenge fraudulent transfers. If a business transferred property or money to avoid paying a debt, the creditor may be able to recover that value.
Options when a business shuts down
If a business closes without paying, a creditor may still have options. This could include filing a claim against the business’s remaining assets or investigating whether the business owner can be held personally responsible. While this depends on the type of business and specific facts, Florida law does provide tools for creditors in these situations.
Creditors should not assume a closed business is beyond reach. A shutdown may slow recovery, but it does not necessarily end the matter. It’s essential to seek legal guidance if you find yourself chasing unpaid debts.