Your Business Deserves To Thrive
We have looked at the laws governing veil piercing in New York, Wyoming, Texas, and Maryland. Veil piercing is available in most other states in varying degrees, but it bears repeating that limited liability is the rule and piercing is the rare exception to be applied only in cases involving exceptional circumstances.[1] The cases we discussed here are merely a…
Maryland. In recent years, Maryland has become one of the most difficult states in which to pierce the corporate veil, with a success rate at about 25.81%.[1] This is an interesting reversal, given that the state had a relatively liberal 40% rate until 1986.[2] Under Maryland law, where there is no allegation of fraud, a court may still disregard the…
Texas. In Texas, veil piercing is in large part governed by the statute. Specifically, a shareholder is not liable to the corporation or its creditors with respect to, among other things, contractual obligations of the corporation on the basis that the shareholder was the alter ego of the corporation or on the basis of actual or constructive fraud, a sham…
Wyoming. Wyoming courts allow veil piercing in about 61.90% of cases, far exceeding the national average, though the small size of the dataset (21) makes it difficult to say that the rate is statistically meaningful.[1] In Wyoming, veil piercing law was also modified by statute around the time this number came out, so that failure of an LLC to observe…
New York. According to a 2010 study of a dataset of 2908 cases from 1658 to 2006, New York courts allow veil piercing in about 49.81% of cases and is among the most prominent producers of veil piercing cases.[1] In Agai v. Diontech Consulting, Inc.,[2] a recent case, a creditor sought to pierce the veil of a corporation, arguing that…
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…
Hill International, Inc. v. Opportunity Partners L.P. In Hill Int’l, Inc. v. Opportunity Partners L.P., Hill asserted that its announcement in 2014 constituted prior public disclosure of the date of the 2015 annual meeting, and since this disclosure was made more than 70 days in advance, Opportunity’s proposals dated May 7, 2015, was untimely for failing to meet the 30-day-window…
Many are familiar with the advantages of having a formal entity for business. Limited liability companies, or LLCs, in particular, have gained popularity in recent years and seem to be the entity of choice for small business owners not only because of the liability shield and favorable tax treatment, but also because of the simplicity and flexibility. Mind you, certain…
Branscome v. Schoneweis. In Branscome v. Schoneweis, Schoneweis and Woodrum, brothers-in-law, were associated in the operation of a livestockyard called Tallula Cattle Company (“Tallula”).[1] Schoneweis was the owner (providing the initial working capital) and Woodrum was the manager (entitled to an equal share of commissions on the sale of all cattle) of the livestockyard (market agency business), while at the…
Cox Enterprises, Inc. v. Filip. In Cox Enterprises, Inc. v. Filip, Filip was owner of Trans Texas Properties and Elliott was not. [1] One of its employees filled out a credit application to obtain newspaper advertising services for the business and falsely listed Elliott as an owner.[2] The employee had no authority to make such representation and Elliott did not…