Territory of the U.S. Virgin Islands v. Goldman, Sachs & Co

In Territory of the U.S. Virgin Islands v. Goldman, Sachs & Co. (Del.Ch. 2007) 937 A.2d 760, the creditors of a dissolved Delaware corporation attempted to sue the corporation's former shareholders more than three years after its dissolution. The Delaware court held that because no judgment could be recovered against a dissolved Delaware corporation after the three-year survival limit under Delaware General Corporation Law section 278, a suit could not be maintained against the shareholders of the corporation under Delaware General Corporation Law section 325, subdivision (b). (Goldman, Sachs, supra, at p. 789.) Section 325 of the Delaware General Corporation Law provides: "(a) When the officers, directors or stockholders of any corporation shall be liable by the provisions of this chapter to pay the debts of the corporation, or any part thereof, any person to whom they are liable may have an action, at law or in equity, against any 1 or more of them, and the complaint shall state the claim against the corporation, and the ground on which the plaintiff expects to charge the defendants personally. (b) No suit shall be brought against any officer, director or stockholder for any debt of a corporation of which such person is an officer, director or stockholder, until judgment be obtained therefor against the corporation and execution thereon returned unsatisfied." Courts in other jurisdictions have also held that Delaware General Corporation Law section 278 operates to bar lawsuits brought against dissolved Delaware corporations after the three-year period. "Although not technically a statute of limitations, section 278 has been held to be 'a clear expression of a legislative policy normally prohibiting the commencement of actions by or against dissolved corporations more than three years after their dissolution.' Courts have consistently concluded that upon expiration of the three-year period, the corporation ceases to exist as a legal entity and no claims may be asserted against it. As the complaint in this case was filed in 1994, almost thirteen years after the corporate defendant was dissolved, the Town's assertion of state law claims against the defendant is prohibited by Delaware law." (Town of Oyster Bay v. Occidental Chemical Corp. (E.D.N.Y. 1997) 987 F.Supp. 182, 211.)