“Piercing a corporate veil” means an individual can be personally liable in certain situations. Courts apply this equitable remedy to avoid improper use of corporate laws meant to shield innocent shareholders and to promote justice.
The doctrine of piercing the corporate veil permits liability to be imposed on individuals for acts of a corporation when two conditions are satisfied: “(1) there is such a unity of interest and ownership that the separate personalities of the corporation and the parties who compose it no longer exist, and (2) circumstances are such that adherence to the fiction of a separate corporation would promote injustice or inequitable circumstances.”
Tower Investors, LLC v. 111 East Chestnut Consultants, Inc., 371 Ill. App. 3d 1019, 1033-34 (1st Dist. 2007).
A quite recent case in Illinois holds that the first “prong” calls for a multi-faceted analysis.
Among the factors courts look to are:
(1) inadequate capitalization; (2) failure to issue stock; (3) failure to observe corporate formalities; (4) nonpayment of dividends; (5) insolvency of the debtor corporation; (6) non-functioning of the other officers or directors; (7) absence of corporate records; (8) comingling of funds); (9) diversion of assets from the corporation by or to a stockholder or other person or entity to the detriment of creditors; (10) failure to maintain arm’s-length relationships among related entities; and (11) whether, in fact, the corporation is a mere façade for the operation of the dominant stockholders.
Buckley v. Abuzir, 2014 IL App (1st) 130469 ¶15. (Internal citations omitted).
Finally, Piercing the corporate veil requires “a substantial showing that one corporation is a dummy or sham for another.” Id. at ¶12, citing In re Estate of Wallen, 262 Ill. App. 3d 61, 68 (2nd Dist. 1994).
You can contact me here 24/7/365 (and I really mean that as I will answer my phone) if you have any questions about what claims/rights you may have after in relation to piercing a corporate veil and/or “alter ego” and to learn how I may be able to help you who may need, or simply want, a second opinion perhaps – in particular, you will find that I listen, take your phone calls and e-mails (and even text messages–BUT NOT WHILE DRIVING!!). I would be honored to help you with your matters – large or small.