Business Law Being Questioned in Wisconsin State Supreme Court
In 2003, the company known as Communications Products Corp., at the request of banks, went into receivership owing over one million dollars to local vendors and banking institutions. As of 2009, the battle over this company’s fallout is still being challenged in the Wisconsin state courts, and has reached the level of the Wisconsin state Supreme Court. The matter at hand revolves around a suit court appointed company receivers made against ex-company owners, Daniel Virnich and Jack Moores. Both men, through the course of owning and operating the business, made decisions engendering them personal benefit, which later on, proved detrimental to employees, vendors, lenders, and other creditors. The fundamental corporate law question being challenged, in turn is whether or not company owners can make business decisions for their personal benefit at the expense of creditors, workers, and the corporations itself, and whether or not the company owners have a personal obligation to fulfill these interests as well, even in a state of insolvency.
In the suit issued by the company receiver against Virnich and Moores on behalf of the company, allegations of ignoring and breaching financial obligations by engaging in self-dealing, as well as taking excessive compensation in light of financial failings are alleged. In defense, Virnich and Moores note the lawsuit is not relevant as the sole company owners, “…they were its only shareholders and were free to manage it for their benefit.” In initial court case, the judge rejected this argument, and a jury awarded the receiver, acting on behalf of ex-employees, creditors, and lenders, an amount of $6.5 million. Both men appealed the decision, however, due to the precarious and statewide influence the case may bring, the case was immediately sent to the state Supreme Court for hearings in January 2009. For any company potentially facing corporate litigation issues, a corporate law attorney with the Law Offices of Ricardo Reyes can help. Contact for legal counsel today.
