Barbara,

You first should determine if they have filed for bankruptcy or closed their doors. If they have filed a petition for bankruptcy, all you can do is file a proof of claim with the bankruptcy court. As an unsecured creditor you will probably wind up with pennies on the dollar if you are lucky, and in most cases you will not get anything regardless of whether it is a reorganization or a liquidation...shades of the Bridgespan problem last year. If you try to sue them after they filed for bankruptcy, you may find yourself in contempt of the court's order for an automatic stay of proceedings.

In the future you may want to run a D & B on a new client before extending large amounts of credit to them. If they indicate that they would like more credit monthly, and you are not comfortable with the D & B results, you could ask them for security for the line of credit. You would have a financing agreement and a financing statement drafted, signed and properly recorded. This would make you a secured creditor in the event of a future bankruptcy.

If you were performing your services for corporations or LLC's and they have closed their doors, you can sue these business entitites. However, there will probably be little if anything left to satisfy the judgment if you win.This becomes harder to collect with the passage of time. You would very possibly spend more trying to collect than you would collect if you won the case.

There are other alternatives if the corporate officer/manager or the LLC's manager failed to observe the corporate/LLC formalities when they signed the contract. If someone has signed the agreement without disclosing the identity of the corporation or LLC or the representative capacity in which he signed (i.e. President,Secretary, Vice-president, Managing Member), he becomes personally liable to you for the work you did.

I just won a suit last month involving a contract in which the defendant failed to identify his LLC or his position as a managing member. He just signed his name, part of the LLC's name, and indicated that he was the owner.He now has to pay my client the judgment against which he thought the LLC protected him. His personal assets and home are subject to satisfaction of my client's claim. For reasons like this, I normally advise my clients to have a rubber stamp made up to disclose this information when entering a contract. In order to retain the protection of the corporate/LLC shield you need to both be properly filed and in good standing with the state. It also is criticle to make certain that you are disclosing both the complete identity of the company and that you are signing in your representative capacity when entering a contract.

There is also another alternative if someone co signed the contract in his personal capacity or as a guarantor he also becomes personally liable to you. However, this is a long shot unless you requested him to do so up front.