unless, of course, they didn't do everything by the book, in which case the corporation could be found null and void and both could be personally liable.
If one of the officers of the corporation told paypal to lock the account that could be enough to pierce the veil of corporate liability if any of the parties owed money cannot retrieve their funds because of that.
This just sounds like a bad deal all the way around. If the two partners are as erratic as they now appear to be. I can't imagine that they were particularly fastidious when money was flowing in.
I think that only applies if you do something illegal. What will probably happen is that they'll get sued, and as part of the settlement the company will be forced to pay out $_ million. Since the company probably won't have that, they'll end up declaring bankruptcy.
