The company is bust – but corporate card bills live on

When a company goes under, employees can be stuck with the liability for their corporate credit cards.

Becky, Birmingham, Ala.
My company, an LLC, is insolvent and dissolving. No formal bankruptcy will be filed, and unsecured creditors will not be paid. I know there’s potential for my credit card company to serve me with a lawsuit if I am unable to commit to a payoff plan. Can my employees also be held liable? In other words, can employees who charged company expenses on the corporate credit card be sued for the amount they charged on the card?
By Lenora Chu, CNNMoney.com contributing writer
Where liability rests depends on the specific terms of the member services agreement under which the corporate card was issued. Those agreements differ widely from issuer to issuer.

Some agreements stipulate that the card issuer must first pursue the company or master cardholder — usually the company officer or director that first opened the account — for unpaid balances, says Joseph Rosenbaum, an attorney and partner with the law firm Reed Smith LLP.

Others allow the issuer to come after both the company and its employees for various charges, says business attorney Steven Fox of the law firm Epstein, Becker & Green.

In this scenario, the agreement generally says that the master cardholder is liable for charges he makes on his individual card, as well as those made on other corporate employee cards, Fox says. Make sure when you write a business checks, that you have the funds to cover for it, or it will add to more problems you have.