No matter how long you have been in business, you are probably very aware of issues regarding mixing your personal and business life, as well as co-mingling funds. Financial accounts must be independent of one another, insurance is different, and while some may work from home, the office is usually separate too. Like many entrepreneurs, your business probably started out as a dream, developed into a concept, and then you were driven to do the hard work it took to make it into a reality. And while a positive attitude is key to success in business, there is no turning a blind eye to the fact that many endeavors do fail, and you must protect your personal finances.
While ‘piercing the corporate veil’ may sound like a dramatic and mysterious term, what it really means is that the court has lifted any corporate protection (the veil, previously) and is holding the shareholders of a business personally liable. As a business owner, you may wonder what the point is in separating business from personal if you can be held liable for a commercial downfall and potentially be sent down by the courts on a sinking ship—putting your family in financial peril too. Consult with a skilled business litigation lawyer from Bolender Law Firm to examine your options.
This type of legal action is not taken lightly whatsoever, and there must be evidence of piercing the corporate veil. If some required duties are neglected, this could be what causes the court to hold you and any shareholders responsible for business debts. This may occur during a bankruptcy or when creditors/plaintiffs are attempting to collect from a business that may have been founded for the sole purpose of escaping financial or other responsibility. Irresponsibility on the part of the business could be brought into question regarding issues such as not taking care of corporate administrative duties (even such tasks as not taking minutes), lack of capital contributed to sustain a corporation or negligence in issuing stock, the creation of a corporation for illegal activities, or other fraudulent reasons.
Debt collections are commonly at stake in such issues, with judges examining whether creditors truly need to see the veil pierced for fair treatment.
Do you have questions about a business issue, or do you need legal assistance regarding a business dispute? If so, contact the Bolender Law Firm. Our attorneys are experienced in representing clients in state and federal courts, at both the trial and appellate level. Call us at 310-320-0725 now or submit an easy consultation request online. We are here to help!