Question: When a company is “inactive” with the Secretary of State Office, what does that mean for the creditor that is still selling them? If the debtor doesn’t pay and it becomes a legal matter will this change anything? Basically, is there anything the creditor should be considering when dealing with an inactive business?

Answer: A company can still technically operate even if inactive. Likewise, you can sue and collect from an inactive company. From the customer’s standpoint, it raises questions as to whether or not the principals of the company can be held personally liable for a debt if it is not paid. Corporate formalities are being disregarded so there may be another source to collect from if debts are not paid. Creditors should also consider whether this company is facing   solvency issues since it has not maintained an active status. This raises initial concerns over payment and whether any credit should be extended under the circumstances.