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LLC Law Update: Piercing the Corporate Veil (Post 1)

On Behalf of | Feb 2, 2016 | Business Management, Choice of Entity, LLC, Personal Liability, Uncategorized

In our previous blog series comparing limited liability company (LLC) statutes, we briefly mentioned that there are situations where courts “pierce the corporate veil” so as to hold LLC members liable for business debts.  We also mentioned that veil piercing requires a highly fact-intensive analysis and that the law varies widely from state to state.  Courts have applied or declined to apply this remedy in a manner that has often been confusing and inconsistent, as two luminaries of the legal world observed over a score of years ago: “Piercing seems to happen freakishly.  Like lightning, it is rare, severe, and unprincipled.”[1]

While the concept of piercing the corporate veil initially developed in the context of corporations, as the name suggests, the advent of the LLC in recent years has prompted new developments in both statutory and case law in many states.  In this blog series, we will give you a snapshot of the laws governing veil piercing in New York, Wyoming, Texas, and Maryland, focusing, to the extent possible, on recent LLC cases.

This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity.

Steps have been taken to verify the contents of this article prior to publication.  However, readers should not, and may not, rely on this article.  Please consult with counsel to verify all contents and do not rely solely on this article in planning your legal transactions.

About the Author

Shawn McBride – R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC, which helps clients in legal issues related to starting companies, joint ventures, raising capital from and negotiating with investors and outside General Counsel functions. Shawn can be contacted at: 407-517-0064, [email protected], or <a ” ” target=”_blank” href=””>

[1] Greenhunter Energy, Inc. v. W. Ecosys. Tech., Inc., No. S-14-0036, 2014 WL 5794332 (Wyo. No. 7, 2014) (quoting Frank H. Easterbrook & Daniel R. Fischel, Limited Liability and the Corporation, 52 U. Chi. L. Rev. 89 (1985)), at *4.