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What bothers me the most is that, in my limited view, these companies can do shady stuff like that, close down and it's end of story. What's in place to punish
by gtirloni 10y ago
What bothers me the most is that, in my limited view, these companies can do shady stuff like that, close down and it's end of story. What's in place to punish the owners so they have less incentive to try this again?
This extends to startups that sign support contracts for their products X years in the future and go belly up, leaving customers with dead weight equipment. A colleague, frustrated at such an event, said he would seek legal reparations to which he heard back "who are you going to sue? The company doesn't exist anymore" and that was it.
What's in place to go after irresponsible individuals in those situations?
EDIT: I understand there are risks in every business negotiation. Would this be an example of customer naivety (in not performing due diligence before acquiring products/service from companies if they expect long-term support?) Is the customer to blame for not knowing how to properly play this game?
- einrealist 10y agoNo, they cannot do that. Delaying filing for insolvency is a crime in Germany. Unable to pay wages is reason enough to file for insolvency. German courts don't take that lightly.
- gtirloni 10y agoSo the owners can go to jail or get their personal property confiscated for this in Germany? That's reassuring. The situation I described happened with a US startup. I'd be curious what we should have done in that situation.
- einrealist 10y agoThey can go to jail, yes. But confiscation of property depends on the company type. Crytek is a "GmbH", which means that the property of the owners is usually safe, unless they unlawfully took assets out of the company.
- lithos 10y agoI can't imagine a silicon valley startup that doesn't blur the lines of miss using assets. Though good luck getting a hold of their books.
- cf21 10y agoIf you delay in filing for insolvency you become liable with your private assets in Germany (certainly true for GmbH).
- spangry 10y agoSame for Australian corporations (directors become liable for knowingly trading while insolvent). Normally they're treated as completely separate legal entities, but not in this specific case. I'm sure there are instances of this in US law too: I'd always thought the term 'piercing the corporate veil' originated from the US...
- crdoconnor 10y agoThis is why unions were formed.