Law School Toolbox Podcast Episode 280: Listen and Learn -- Piercing the Corporate Veil
Bar Exam Toolbox Podcast Episode 120: Listen and Learn -- Piercing the Corporate Veil
Laura Graham was injured when she tripped over a sprinkler box located on property owned by a single member limited liability company. She sued the LLC and asserted that its member was the alter ego of the LLC and the case...more
When a debtor LLC receives a discharge order from a bankruptcy court, a creditor is prevented from enforcing any preexisting debts against the discharged LLC as a personal liability. This is known as the “discharge...more
Unionized employers participating in an underfunded multiemployer pension plan face significant financial exposure when withdrawing (completely or partially) from the plan. The cost (called “withdrawal liability”) is...more
Alter ego liability is again the flavor of the day... As previously covered, the alter ego doctrine allows a court to disregard a corporate entity (including LLCs) and hold the individual owners liable for claims against...more
Michael Jackson died in 2009. After his death, two plaintiffs filed complaints against two corporations of which Michael Jackson was the sole shareholder. The trial court sustained the plaintiffs' demurrer setting up...more
"Outside reverse veil piercing" allows a shareholder's creditor to reach corporate assets. In Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal. App. 4th 1510 (2008), the Fourth District Court of Appeal rejected outside...more
Alter ego liability is a frequent topic covered in The LLC Jungle — see here for a list of all prior “alter ego” related posts. The alter ego doctrine allows a court to disregard a corporate entity (including LLCs) and...more
...Normally, a court will treat a business entity and its liabilities as separate and distinct from its owners. The alter ego doctrine allows the corporate veil to be pierced, and results in holding the owners liable for the...more
Historically, the alter ego doctrine has been applied to hold a shareholder or shareholders liable for the claims made against the corporation. In general, two requirements must be met for the doctrine to be applied. First,...more
In a recent ruling, U.S. District Court Judge Dale A. Drozd applied California law to the determination of which law to apply to an alter ego claim...more
The Alter Ego Doctrine and Taxes What is an “alter ego?” The phrase is Latin, translating to “second I,” “another I,” or “other self.” In the federal tax context, the alter ego doctrine comes into play where the IRS...more
A charging order is a device used by a judgment creditor to collect on a judgment against an LLC member. The charging order imposes a lien on the judgment debtor’s economic (or “transferable”) interest in the LLC — the order...more
In an granting a motion to dismiss a counterclaim for veil-piercing, Chancellor McCormick recently reminded litigators that “veil piercing is a tough thing to plead and a tougher thing to get.” ...more
Normally, a business entity is considered a legal person separate and apart from its individual owners. But when the entity is used by an owner to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful...more
“It’s My Business”- The owner of a closely held business will often find it difficult to distinguish the business from their own person. That is certainly true for a sole proprietorship. In many cases, unfortunately, the...more
In a recent case before the Fifth Circuit Court of Appeals, the court was faced with the following question: Whether a business owner could be held personally liable for his corporation’s failure to pay taxes. Its answer?...more
A corporation is a separate legal entity. This status normally insulates its owners or shareholders from personal liability for the corporation’s obligations. But Texas law recognizes exceptions to this general rule. ...more
Last week, I took note of the Second District Court of Appeal's decision that allows for the possibility outside veil piercing, Blizzard Energy, Inc. v. Bernd Schaefers, 2021 Cal. App LEXIS 968. Readers may recall that the...more
Reverse veil piercing involves subjecting an entity to the liabilities of its owner. As Professor Bainbridge has noted, there are two types of reverse veil piercing...more
Earlier this year, Houston Harbaugh wrote on the then-pending Pennsylvania Supreme Court case of Mortimer v. McCool, which presented the question of whether the Court would adopt the “enterprise” or “single entity” theory of...more
Creative attempts to ‘pierce the corporate veil’ sometimes come before the Courts of Bermuda, the British Virgin Islands, and the Cayman Islands. In some cases, an attempt is made to establish personal liability on the...more
In an opinion issued last week, U.S. District Court Edward M. Chen ruled that Ohio law applied to an alter ego claim against the members of an Ohio limited liability company. Greenlight Sys., LLC v. Breckenfelder, 2021 U.S....more
One of the essential purposes of forming an entity and conducting business through that entity is to limit the owners’ personal liability. California law generally views the entity and its owners as separate and legally...more
The “alter ego” doctrine allows a creditor of a business entity to “pierce the corporate veil” and enforce the debt against the company’s individual owners. The standards for proving alter ego liability are high, and the...more
Welcome back to the Law School Toolbox podcast! Today, we have another episode in our "Listen and Learn" series, where we review a substantive area of the law and apply that law to fact patterns. This time we're looking at...more