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972-248-8080 DALLAS
713-830-2207 HOUSTON
512-691-4100 AUSTIN

Forfeitures and Terminations of Texas Business Entities

Ensure your business is built on a solid foundation with the help of skilled attorneys who specialize in entity formation, litigation, and safeguarding operations for long-term success.

Understanding Entity Forfeiture and Reinstatement in Texas

Businesses operating in Texas often establish formal entities like LLCs, corporations, or partnerships. While these structures provide significant benefits, they also come with responsibilities. A failure to meet legal obligations—such as paying franchise taxes—can lead to forfeiture or termination of an entity. However, understanding the nuances of forfeiture and reinstatement can help businesses navigate these challenges effectively. Neither the forfeiture of corporate privileges by the comptroller nor the forfeiture of a corporation's charter by the secretary of state extinguishes the corporation as an entity. See Hinkle v. Adams, 74 S.W.3d 189, 193 (Tex.App.-Texarkana 2002, no pet.); Lighthouse Church of Cloverleaf v. Tex. Bank, 889 S.W.2d 595, 601 (Tex.App.-Houston [14th Dist.] 1994, writ denied). Moreover, if a corporation files its delinquent reports and pays its delinquent franchise taxes, its corporate privileges and charter are retroactively reinstated. Hinkle, 74 S.W.3d at 193–94. Parker Cty.'s Squaw Creek Downs, L.P. v. Watson, No. 2-08-255-CV, 2009 WL 885941, at *6 (Tex. App.—Fort Worth Apr. 2, 2009, pet. denied


Tax Forfeiture of a Business Entity in Texas

Under the Texas Tax Code (§171.301–.3015), the State Comptroller may initiate the forfeiture of an entity's right to do business if franchise taxes remain unpaid. Additionally, the Texas Secretary of State may forfeit an entity’s charter, certificate, or registration due to delinquent taxes (§171.309).


Key Consequences of Tax Forfeiture:


  • Loss of Legal Standing: Entities forfeited for tax delinquency lose the ability to initiate lawsuits.
  • Personal Liability: Directors and officers can become personally liable for the entity’s debts, including unpaid taxes (Texas Business Organizations Code (TBOC) §§171.252 and 171.255).


Download Texas Secretary Of State Involuntary

Termination of Business Entity Article.


Reinstatement After Tax Forfeiture


To reinstate an entity, businesses must:

  • File all overdue tax reports.
  • Pay all outstanding taxes and fees.
  • Submit reinstatement paperwork to the Secretary of State (TBOC §171.312).

Once reinstated, the entity regains its corporate privileges retroactively, as if the forfeiture never occurred. The Texas Court of Appeals has upheld this principle, ensuring entities can continue as though no interruption existed (Manning v. Enbridge Pipelines, 345 S.W.3d 718). Simply, after reinstatement, the revived rights relate back to the point of the delinquency. Flameout Design & Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d 830, 839 (Tex.App.-Houston [1st Dist.] 1999, no pet.). Manning v. Enbridge Pipelines (E. Tex.) L.P., 345 S.W.3d 718, 723 (Tex. App.—Beaumont 2011, pet. denied).


Voluntary Termination or Involuntary Termination by the Secretary of State

Entities in Texas can also voluntarily terminate their status by filing a certificate of termination (TBOC §11.101). Conversely, the Secretary of State may involuntarily terminate an entity for reasons such as:

  • Failure to maintain a registered agent or office (TBOC §11.251).
  • Non-payment of required fees (TBOC §11.252).
  • In such cases, a certificate of termination is filed, ending the entity's legal existence.


Grace Period During Forfeiture

Under Texas law, any individual or entity can file a lawsuit against a terminated business during the three-year grace period following termination, unless the claim has been extinguished. A claim may be extinguished if the claimant either fails to present the claim or does not file an action after receiving notice from the terminated entity that the claim would be handled under Section 11.358 of the Texas Business Organizations Code. If the entity rejects the claim, the claimant has 180 days to file a lawsuit, provided the three-year grace period does not expire within that timeframe. The lawsuit must be filed before the earlier of these two deadlines: the end of the 180-day period or the expiration of the three-year grace period (TBOC §11.359(b)).


A reinstatement “generally has retroactive effect in the sense that the [limited liability company]’s existence is deemed to have continued uninterrupted from the date of termination.” 20 Elizabeth S. Miller and Robert A. Ragazzo, Texas Practice Series: Business Organizations § 21.20 (3d ed. 2012). Because Plaintiff's entity status as a limited liability company was reinstated within three years of its involuntary termination, the Court finds that Plaintiff's existence is deemed to have continued uninterrupted from the date of termination. See Tex. Bus. Orgs. Code Ann. § 11.253(d). Accordingly, the Court finds that Plaintiff has the legal capacity to maintain the present action. See id.; 20 Elizabeth S. Miller and Robert A. Ragazzo, Texas Practice Series: Business Organizations § 21.20 (3d ed. 2012); see also Acme Color Art Printing Co. v. Brown, 488 S.W.2d 507, 508–09 (Tex. Civ. App.—Dallas 1972, writ ref'd n.r.e.) (Plaintiff's entity status was forfeited for failure to pay franchise taxes in April 1971, plaintiff filed suit against defendant in March 1972, and plaintiff's charter was reinstated in April 1972. The court found that because plaintiff's charter had been reinstated, it had standing to proceed with the suit, “regardless of whether it had such standing ... when the petition was filed.”); Rosewood Prop. Co. v. Hardy, No. 05-94-01227-CV, 1995 WL 479656, at *7 (Tex. App.—Dallas Aug. 10, 1995, no writ) (not designated for publication) (noting that “a corporation whose charter has been forfeited for failure to pay franchise taxes and is later reinstated upon payment of those taxes can maintain a suit commenced before reinstatement”). Vernon Feeders, LLC v. Cabaniss Dairy, LLC, No. 7:13-CV-00069-O, 2013 WL 12137768, at *1 (N.D. Tex. July 9, 2013).

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Frequently Asked Questions

Corporate Reinstatement: A Critical Lifeline

Under TBOC §11.253, reinstatement before the third anniversary of an entity’s termination restores its status retroactively. This principle applies whether the termination resulted from tax delinquency or other causes. For instance, courts have affirmed that reinstated entities can sue or defend as if their rights were uninterrupted (Hinkle v. Adams, 74 S.W.3d 189). Moreover, reinstated entities can maintain actions initiated before or during the forfeiture period (Parker County's Squaw Creek Downs, L.P. v. Watson). After reinstatement, the revived rights relate back to the point of the delinquency. Flameout Design & Fabrication, Inc. v. Pennzoil Caspian Corp., 994 S.W.2d 830, 839 (Tex.App.-Houston [1st Dist.] 1999, no pet.). Manning v. Enbridge Pipelines (E. Tex.) L.P., 345 S.W.3d 718, 723 (Tex. App.—Beaumont 2011, pet. denied).


Practical Implications for Businesses

Retroactive Reinstatement Protects Legal Rights

Businesses reinstated within three years of termination can revive claims and defenses as if the forfeiture never happened. For example, courts have held that reinstated entities retain the right to defend lawsuits or assert claims, regardless of when the causes of action arose. Under the analogous statute that applies to corporations, “[o]nce the right to sue or defend is revived, the corporation may sue or defend all causes of action, regardless of whether such causes arose before or during the period of forfeiture.” G. Richard Goins Constr. Co., Inc. v. S.B. McLaughlin Assocs., Inc., 930 S.W.2d 124, 128 (Tex.App.-Tyler 1996, writ denied). Revival reinstates all rights “as if the disability had never existed.” Id. Manning v. Enbridge Pipelines (E. Tex.) L.P., 345 S.W.3d 718, 723 (Tex. App.—Beaumont 2011, pet. denied).


Personal Liability During Business Forfeiture

While forfeiture is in effect, officers and directors may face personal liability for the entity’s debts. Reinstatement, however, does not erase this liability for the forfeiture period.


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By John Wilson February 19, 2025
Copyright and Translated Content: Who Owns the Creative Rights? Understanding Copyright Law and Translation Copyright law protects creative work and bestows sole authority over the work upon the creators. For example, the owner of the work of a novel has the right over the work under the concept of the right under the copyright. Courts have found that “the degree of protection afforded by the copyright is measured by what is actually copyrightable in the publication and not by the entire publication.” See, e.g., Dorsey v. Old Sur. Life Ins. Co., 98 F.2d 872, 873 (10th Cir. 1938) (emphasis added). For translations, the situation is not very clear. Translations involve creative judgments over word translation and not the translation of mere words. Hence the knowledge about the applicability of the concept of the right over the work is essential for establishing the right over the work. For example, a Court in the Northern District of California stated that: “ the determinative question is whether Plaintiff holds a valid copyright. ” Signo Trading Intern. Ltd. v. Gordon, 535 F. Supp. 362, 363 (N.D. Cal. 1981). The Signo Trading Court dismissed Plaintiff’s infringement claims because plaintiff did not have a valid copyright as a matter of law in the translations and transliterations at issue because they lacked the “requisite originality.” Id. at 365. Can Translation Be Considered a Creative Process? The Practice of Translating Translation goes beyond the replacement of one word by the equivalent word from the source text. Translating literary work, poetry, and fiction with deeper meanings beyond the surface text is a complex, artistic process. Translating books like The Iliad, for instance, requires the practice of artistic translation to translate the emotions, thoughts, and the culture correctly. Technical Translations and Legal Translations Conversely, technical writing and texts for the law need less creativity and instead value correctness over all else. These writing forms require strict adherence to the original sense, leaving very little room for artistic interpretation. Translations for these writing forms thus typically involve less creative contribution and less potential for the work being protected by copyright. Why Is Creativity Important for Translations for Copyright? Originality when translating For a work to be subject to copyright, some creativity, however slight, is essential. Even when the translation is taken from the work, the translation also includes some creative work by the translator. This creativity can make the translation subject to copyright. A derivative work must “recast, transform[], or adapt[]” a preexisting work and “consist[] of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship.” Id. In other words, it must change or alter the pre-existing work’s content and must itself be an original work of authorship. The Supreme Court stated that “ [t]he sine qua non of copyright is originality ” and that “ [t]o qualify for copyright protection, a work must be original to the author. ” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991) at 345. “Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.” Id. (citing 1 M. Nimmer & D. Nimmer, Copyright §§ 2.01[A], [B] (1990)). In granting a Rule 12 motion to dismiss, the Signo Trading Court held that: " It is inconceivable that anyone could copyright a single word or a commonly used short phrase, in any language. It is also inconceivable that a valid copyright could be obtained for a phonetic spelling, using standard Roman letters, of such words or phrases. Although lists of words and translations of larger works may be copyrightable, Plaintiff cannot claim credit for any of the elements which make those things copyrightable. For these reasons, Plaintiff does not hold a valid copyright on the translations or transliterations ... " Signo Trading, 535 F. Supp. at 365. The Problem of the Derivative Work However, translations are generally "derivative works" - derived from the work of another. Because of this, the owner or author of the work is generally required to agree to the translation. Translations made illegally can be held under the classification of copyright violations, even when the translator has added creative elements. Who Has the Right over the Translated Work? Employer-Commissioned Translations Ownership of the copyright for the translation work varies. If the translation is commissioned by the owner of the original work, the owner will retain the right. Even when the translator adds creativity by passing over the original emotions and thoughts, the owner will not necessarily lose the right over the translation work. In some circumstances, the translation work can be accredited by the translator without them holding the right over the work. Independent Translations If a translation is performed independently by the translator, the translator can even be identified as the co-author of the translation. Nevertheless, the author typically has the underlying copyright, restricting the translator’s right over the work. Creative Translations from the Public Domain In certain cases, a translation may be creative enough to warrant its own copyright. For example, a translator adapting a classic work or a book in the public domain into modern language may introduce enough originality to qualify for copyright protection. However, direct, word-for-word translations are typically not considered original enough to receive new copyright protection. What About Machine Translations? The Human Creativity Copyright Requirement Machine-generated translations, including those produced by platforms like OpenAI , operate through advanced algorithms that replicate language patterns rather than capture the human touch. Unlike translations crafted by human translators who often infuse cultural insight and genuine emotion into the work, OpenAI's output is rooted in statistical patterns and data. Consequently, while these translations are impressively efficient and accurate, they typically fall short of the originality required for copyright protection. This distinction underscores the human creativity requirement needed to secure a valid copyright . Ultimately, although machine-generated translations serve as powerful tools, they do not offer the same legal and creative protections as those provided by human translators. The Bottom Line: Navigating Copyright in Translations Translations occupy the middle ground under the law of the copyright. Albeit the right of the original author generally has the right under the copyright, the right under the copyright can also be claimed by the translator provided the translation is creative enough. Central considerations here include the creativity the translator has added, the nature of the work being translated, and whether the work is under the public domain. These considerations establish the right of the owner under the copyright for the translation. Why Wilson Whitaker Rynell for Your Copyright Work? At Wilson Whitaker Rynell, our professional lawyers specialize in the practice of copyright law and copyright litigation , including the complex subject matter of translation work. We can provide you with advice about the ownership of your work under the provisions of the copyright, and protect your creative property. If you are the author, the publisher, or the translator, you can rely upon the advice from our firm. Copyright Translation FAQS
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By John Wilson January 23, 2025
Understanding Writs of Execution in Texas: A Layperson’s Guide If a court determines that someone owes money to another party, the debtor—referred to as the "judgment debtor"—typically has 30 days to pay off the debt. If the debt remains unpaid after this time, the creditor, or "judgment creditor," can take legal action to enforce the payment through a Writ of Execution . This legal process, governed by Texas law, enables creditors to collect what they are owed by seizing and selling the debtor’s non-exempt assets. What Is a Writ of Execution? Under Texas Rules of Civil Procedure 629 , a Writ of Execution is a court order that authorizes a sheriff or constable to seize the debtor’s property to satisfy the debt. This writ is an essential tool for creditors when voluntary repayment has not occurred. Once the writ is issued, it is handed over to a county constable or sheriff, who is required to act “without delay” in collecting the debtor’s real and personal property. The seized property is then sold, and the proceeds are used to pay off the debt. If multiple writs are filed against the same debtor, the assets are distributed in the order the writs were received. What Property Can Be Seized Under a Writ of Execution? Texas law is very specific about which types of property can and cannot be seized to satisfy a judgment. Exempt Property Certain assets are protected from seizure under Texas Property Code § 41.001. These include: The debtor’s homestead (primary residence) Wages earned from employment Professionally prescribed health aids Workers’ compensation benefits College savings plans Some insurance benefits Personal property valued up to $50,000 for individuals and $100,000 for families Unique to Texas, the law also protects items like family Bibles, two firearms, pets, and for rural residents, livestock (e.g., 12 head of cattle and 120 fowl). This extensive list reflects Texas's cultural heritage and values. Non-Exempt Property Assets that are generally not exempt include: Vacation homes Timeshares Pleasure boats Airplanes Jewelry exceeding certain value thresholds The specific procedures for seizing different types of property are detailed in Texas Rules of Civil Procedure 639 . Can a Writ of Execution Be Avoided? Judgment debtors have a few options to avoid the execution of a writ: Filing a Supersedeas Bond A supersedeas bond can temporarily halt enforcement of the writ. This bond, filed with the county clerk or justice of the peace, preserves the status quo while the debtor seeks further legal remedies. This option is governed by Texas Rules of Civil Procedure 634 . Challenging the Execution Debtors can file a claim for wrongful execution in situations such as: The debt has already been paid Exempt property is being seized The levy is excessive Additionally, courts take extra care to protect property classified as a homestead under Texas Property Code § 41.002(c) . When only one spouse is responsible for the debt, Texas Family Code § 3.202(a) and related provisions provide guidance on levying against community or separate property. The Role of County Officials in Executing the Writ Once the writ is issued, its enforcement falls on county officials, typically a sheriff or constable. These officials must act in accordance with Civ. Prac. & Rem. Code § 34.072 , which requires them to execute the writ and report back to the court. They must: Give proper notice of the sale of seized property Ensure the proceeds are appropriately delivered to the creditor Avoid overstepping legal boundaries, such as seizing exempt property Failing to execute the writ properly can result in serious consequences, where a sheriff’s refusal to levy on a property initially listed as exempt (but later deemed abandoned) led to court action and damages awarded to the creditor. Preventing Fraudulent Transfers One challenge creditors face is when debtors attempt to hide or transfer assets to avoid collection. To address this, Texas follows the Uniform Fraudulent Transfer Act under Tex. Bus. & Comm. Code § 24.001 et seq .. This act provides legal remedies to creditors when a debtor’s transfer of assets is deemed fraudulent. Effect of a Defendant's Death on Writs of Execution Under Civ. Prac. & Rem. Code § 34.072 , the death of a defendant after a writ of execution is issued halts execution proceedings. However, any lien acquired from the writ's levy is still enforceable by the county court when paying off the deceased's debts. Why Proper Execution Of The Writ Is Crucial The rules for filing and serving a Writ of Execution are strict and detailed. Missteps, such as filing the writ in the wrong county, failing to serve the proper parties, or missing key deadlines, can lead to delays or even render the writ ineffective. Both creditors and debtors must ensure compliance with these rules to avoid unnecessary complications. For creditors, failure to properly enforce the writ could mean losing the opportunity to collect on a judgment. For debtors, not responding appropriately to a writ could result in the loss of valuable assets, even those that might have been exempt.
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