I have a client who owns a corporation. The corporation may have a civil suit filed against it for an issue arising from wrong doing on the part of a former employee. The shareholders are wanting to form a new corporation to protect the business assets. Does this give them protection if the old corporation does end up with a judgement against it?

More likely a court would consider this fraud.

Yes, they are of course free to start a new corporation, but they can't transfer assests to the new one.

You can close the one corporation, go out of business, sell off everything, divide it amount the stock holders.

But most likely the courts would still follow the assests of the corporation.