LLC corporate piercing cases

[Mary Joe]

It's best not to have an LLC than to have one that is put together or run poorly.

I came across this case "Colorado Court of Appeals Pierces the Veil of Single-Member LLC with No Showing of Wrongdoing" - I don't know why the title says no showing of wrongdoing, if you read the article, the LLC member did a lot of things wrong....

http://www.llclawmonitor.com/2012/03/articles/piercing-the-veil/colorado-court-of-appeals-pierces-the-veil-of-singlemember-llc-with-no-showing-of-wrongdoing/

Another LLC piercing case

http://www.professorbainbridge.com/professorbainbridgecom/2012/05/more-llc-veil-piercing-silliness.html

Also interesting comment from the article:

Both cases support Professor Stephen Bainbridge

[Jerry W.]

@Mary Joe , thank you for posting the cases on Piercing the Corporate veil. A lot of folks think paying the 100$ to set up an LL automatically gives them immunity from liability. Taking the extra time to talk to an accountant and attorney and learning what you must do to keep the corporate formalities is very important. Some things like comingling of assets are the main way of piercing the veil, or using them as an alter ego of the members.

If you use one bank account for personal and corporate funds you should not have wasted the money to set it up. The same is true if you use the company checkbook to buy groceries or pay your power bill. I hate to think how many LLCs do not keep minutes of yearly meetings, do corporate resolutions etc. Getting the corporation online with no instructions on how to run them is like buying a 16 year old a car and letting them drive without teaching them. The odds are high there will be a wreck.

Forming an S. Corp or LLC can give significant reduction in liability of your personal assets, but will not stop liability completely. Most banks will not loan to private companies without personal guarantees, and you are still personally liable for acts you do personally if they are negligent or harm to another.

I have done several posts on this area if anyone wants to read more.