Legal Question in Bankruptcy in Illinois

Should an IL Chapter 7 filing discharge personal debt resulting from "piercing the corporate veil" of my now dissolved single member llc? A creditor has contested their portion of the discharge. Do the specific criteria of piercing the veil matter?

Asked on 9/12/13, 2:34 pm

1 Answer from Attorneys

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Did you have legal help in the filing? Why didn't you file for the LLC and yourself? If you put your assets into an LLC the creditor may have a claim for fraudulent conveyance, or preference depending on when the assets went it, etc. Alternatively one of your assets would be your LLC membership and its economic value -- and hiding it is a problem. Get an attorney's help. Aside from that, is the creditor yours, or the LLCs? If the LLC owes the creditor, normally the creditor would have to get a judgment against the LLC, and then claim through collection proceedings that you did not properly account for LLC activity that would allow a "piercing". If the creditor is yours and you properly listed your LLC membership interest as an asset, but it has no value, the creditor is usually barred -- the creditor would have to file an adversarial claim to get inside the LLC to determine whether it has value that is attributable to you.

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Answered on 9/13/13, 1:39 pm

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