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  • veil of incorporation?

    this is in Indiana...

    two brothers, the sole owners of Corp A. Through 25-30 they built a
    reputable bookstore chain. They wound up nearly exclusively buy all
    of their (consignment) stock from *one* business (a partnership). Then
    things fell apart. They shuttered their last mall store in December 2005
    with an outstanding $200+K debt. They returned stock of $50K and have
    not declared bankruptcy, yet claim to be insolvent.

    The Partnership (Plaintiff) wants *all* corporate records and has filed
    suit. The Corporate brothers reply and ask for a Summary Judgement to
    separate their Personal liability of the debt. There was a legit
    Credit Line Agreement and Security Agreement betwixt the parties.

    Now, the Court, faced with tossing it, or, playing for time under
    an Extension (30 days) for Discovery.

    It's a real mess. Is this a normal flow of "alter ego" to "veil"
    for folks to save their homes, cars, dogs, etc? Ya, don't say get
    "professional" legal help, it's simple, how does one get paper on
    a corporation when it's "lost" $150K? No, you can't go fraud (criminal)
    but it would be nice to see if all the dots where made & tees crossed
    in a public record of incoporation. Seems they have $ for lawyers,
    and to countersue, but they *have* gained wealth at the expense
    of the Plaintiff. I'm not a lawyer, but seems pretty direct. Even the
    Defense uses the term that the misrepresentation aspect might be "in play"

    suggestions appreciated... he's got 30 days to accomplish Discovery...





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  • #2
    veil of incorporation?

    AND,

    One of the purposes of incorporation is to protect owner/investors from
    suits such as you may be describing. Hard to say though, you describe things
    rather badly. The personal assets of the brothers should be protected but
    sometimes folks give in to temptation and try to shuffle paperwork and
    assets around to hide some things. Thus, the plaintiff's request to see the
    books.
    Still society regards the protections of incorporation to be a good
    thing. Assuming the books are ok these brothers apparently ran a multi-store
    business for many years which is a good thing. Money was redistributed,
    people were employed, taxes were paid et c. The actual dollar figure you
    give as the unpaid debt sounds quite small for a medium size business
    So, back to your question, are you saying that the plaintiff is pursuing
    this matter without a lawyer? Has the defendant corporation gone through
    bankruptcy? Why is the plaintiff suing and for what?
    "AND Books" <[email protected]> wrote in message
    news:[email protected]
    this is in Indiana... two brothers, the sole owners of Corp A. Through 25-30 they built a reputable bookstore chain. They wound up nearly exclusively buy all of their (consignment) stock from *one* business (a partnership). Then things fell apart. They shuttered their last mall store in December 2005 with an outstanding $200+K debt. They returned stock of $50K and have not declared bankruptcy, yet claim to be insolvent. The Partnership (Plaintiff) wants *all* corporate records and has filed suit. The Corporate brothers reply and ask for a Summary Judgement to separate their Personal liability of the debt. There was a legit Credit Line Agreement and Security Agreement betwixt the parties. Now, the Court, faced with tossing it, or, playing for time under an Extension (30 days) for Discovery. It's a real mess. Is this a normal flow of "alter ego" to "veil" for folks to save their homes, cars, dogs, etc? Ya, don't say get "professional" legal help, it's simple, how does one get paper on a corporation when it's "lost" $150K? No, you can't go fraud (criminal) but it would be nice to see if all the dots where made & tees crossed in a public record of incoporation. Seems they have $ for lawyers, and to countersue, but they *have* gained wealth at the expense of the Plaintiff. I'm not a lawyer, but seems pretty direct. Even the Defense uses the term that the misrepresentation aspect might be "in play" suggestions appreciated... he's got 30 days to accomplish Discovery... --

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    • #3
      veil of incorporation?


      "AND Books" <[email protected]> wrote in message
      news:[email protected]
      this is in Indiana... two brothers, the sole owners of Corp A. Through 25-30 they built a reputable bookstore chain. They wound up nearly exclusively buy all of their (consignment) stock from *one* business (a partnership). Then things fell apart. They shuttered their last mall store in December 2005 with an outstanding $200+K debt. They returned stock of $50K and have not declared bankruptcy, yet claim to be insolvent. The Partnership (Plaintiff) wants *all* corporate records and has filed suit. The Corporate brothers reply and ask for a Summary Judgement to separate their Personal liability of the debt. There was a legit Credit Line Agreement and Security Agreement betwixt the parties. Now, the Court, faced with tossing it, or, playing for time under an Extension (30 days) for Discovery. It's a real mess. Is this a normal flow of "alter ego" to "veil" for folks to save their homes, cars, dogs, etc? Ya, don't say get "professional" legal help, it's simple, how does one get paper on a corporation when it's "lost" $150K? No, you can't go fraud (criminal) but it would be nice to see if all the dots where made & tees crossed in a public record of incoporation. Seems they have $ for lawyers, and to countersue, but they *have* gained wealth at the expense of the Plaintiff. I'm not a lawyer, but seems pretty direct. Even the Defense uses the term that the misrepresentation aspect might be "in play" suggestions appreciated... he's got 30 days to accomplish Discovery... --

      One of the main purposes of incorporating is to protect against individual
      liability. Generally, the shareholders are only liable for their
      investment. Since, in your case, they have surrendered their stock, they
      are not any more liable. The exception is to "pierce the corporate veil".
      Each state is different, but generally, to pierce the veil, you must show
      that they treated corporate assets as their own and did not follow corporate
      formalities. Look for lack of annual meeting minutes, commingling of funds,
      or corporate funds/assets used for personal purposes. This is a very
      fact-sensitive question. Get the corporate records and see if you can find
      any of these. If you are doing this pro se, I recommend you hire an
      attorney as this is very difficult to accomplish, even for an attorney.



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