Category: Veil-piercing

VEIL PIERCING

By , March 30, 2017 12:56 pm

The post under the link below discusses three recent veil piercing cases, including an LLC case in which the courts held that the LLC in question complied adequately with “corporate” [sic] formalities for anti-veil piercing purposes. Needless to say, all LLC lawyers need to be familiar with significant current developments in veil piercing law, such as those addressed in the post below, especially insofar as these developments expressly involve LLCs.

Here’s the link: http://www.lexology.com/library/detail.aspx?g=58c0b599-3216-4a09-ac21-ecba1621fb64&l=7TZK1CQ

LOANS AMONG RELATED ENTITIES

By , February 15, 2017 10:54 am

Whenever you create a holding company/operating company for your LLC formation clients, you need to provide for itcas among them for tax purposes and anti-veil piercing purposes.  The new post under the following link discusses intercompany loan agreements:

http://www.taxlawforchb.com/2017/01/loans-between-related-entities/

EXCEPTIONS TO LIABILITY SHIELD OF FLORIDA LLCS

By , January 5, 2017 12:23 pm

The article cited below will be of particular interest to Florida LLC lawyers, but the legal concepts addressed in it are likely to relevant to LLC lawyers in many other states as well.

90-NOV Fla. B.J. 26
Florida Bar Journal
November, 2016
Column
Business Law
JUDICIAL EXCEPTIONS TO LIMITED LIABILITY PROTECTION PROVIDED BY FLORIDA LLCS

UNDOCUMENTED LOANS FROM SHAREHOLDERS TO THEIR CORPORATIONS

By , October 31, 2016 12:46 pm

The excellent post under the link below is about unrecorded loans from the shareholders of closely held corporations to their corporations, but it applies equally to loans by LLC members to their LLCs and from LLCs to their members.  The issue comes up constantly, and it has big implications for veil-piercing.

Here’s the link:    http://www.taxlawforchb.com/2016/08/look-on-the-balance-sheet-is-it-debt-is-it-equity-its-anyones-guess/#

REVERSE PIERCING CASE

By , September 6, 2016 1:41 pm

LLC lawyers should advise their LLC formation clients about how to avoid not only standard but also reverse veil piercing.  In an impressive  decision filed on July 18, 2016 entitled Sky Cable, LLC v. Coley, 2016 WL 3926492 (W.D.Va., July 18, 2016), a Virginia federal district court has applied Delaware law on the application of reverse piercing to an LLC.  The full text of the decision may be found at http://goo.gl/9fCLNg.

I am indebted to Jay Adkisson for bringing this case to my attention.

VIRGINIA S. CT. VEIL-PIERCING CASE

By , August 3, 2016 9:06 am

LLC formation lawyers should have a detailed understanding of LLC veil-piercing and should instruct their clients about how to avoid veil-piercing.  The link below is to a post about an important Virginia Supreme Court decision about LLC viewpoint.  The analysis in the decision would undoubtedly be persuasive in other jurisdictions.

Here is the link:  http://www.lexology.com/library/detail.aspx?g=c66efa37-15a2-4372-8ced-0217fed3cea7&l=7RWPHFT

NEW ARTICLE ON LLCS AND VEIL-PIERCING

By , March 21, 2016 9:47 am

Every LLC lawyer should have a reasonably sophisticated knowledge of veil-piercing law as applicable to LLCs.  Following is a cite to a comprehensive new article on that subject and a brief introduction to the article:

IF THE VEIL DOESN’T FIT . . . AN EMPIRICAL STUDY OF 30 YEARS OF PIERCING THE CORPORATE VEIL IN THE AGE OF THE LLC

Wake Forest Law Review Winter, 2015 50 Wake Forest L. Rev. 1229 Rolf Garcia-Gallont , Andrew J. Kilpinen

“The more things change, the more they stay the same.” Or so it seems, based on the results of this Empirical Study of how courts apply the doctrine of piercing the corporate veil. This Study began with an eye towards identifying if, and to what extent, the Great Recession had influenced the way courts handle veil-piercing questions.”

DELAWARE COURT OF CHANCERY VEIL-PIERCING CASE

By , January 28, 2016 4:20 pm

If you form a Delaware LLC for your client, you have a duty to explain to the client the Delaware rules governing LLC veil-piercing, and you must explain to the client how to minimize the risk of veil-piercing.  The link below summarizes a very recent Delaware corporate veil-piercing case.  The veil-piercing doctrine in the case applies equally to Delaware LLCs.

http://delawarechancery.foxrothschild.com/practice-pointers/claim-for-piercing-the-corporate-veil-analyzed-by-chancery/?utm_source=Fox+Rothschild+-+Delaware+Court+of+Chancery+Practice+Blog&utm_campaign=7765f7fa72-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_86821ff155-7765f7fa72-70733165

BLOG POST ABOUT CORPORATE PAYMENTS OF SHAREHOLDER’S PERSONAL EXPENSES

By , January 12, 2016 9:23 am

The new post under the link below is not about a LLC, but rather, about a state-law business corporation taxable as C corporation.  But the post shows the dire tax consequences for the corporation in paying as deductible expenses amounts that were really for the personal benefit of the principal shareholder.  LLCs can also fall into this tax trap, and if they pay for members’ personal expenses, this can also lead to veil-piercing.

http://www.taxlawforchb.com/2015/12/as-you-make-your-bed-so-you-must-lie-in-it/?utm_source=Tax+Law+for+the+Closely-Held+Business&utm_campaign=ff464c2e33-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_4d5d267118-ff464c2e33-73367009

VEIL-PIERCING

By , December 16, 2015 11:04 am

The new law journal article cited below will be of interest to anyone interested in LLCs, but particularly to Illinois LLC lawyers.

103 Ill. B.J. 46
Illinois Bar Journal
July, 2015
Business Law
CAN YOU PIERCE THE VEIL OF AN ILLINOIS LLC
Sandra D. Mertens
Copyright © 2015 by Illinois State Bar Association; Sandra D. Mertens