Legal Question in Business Law in Missouri

We have been in business for seven years and now behind in payments. The bank is talking foreclosure but has not done so yet. Is it to late to file an LLC?


Asked on 9/18/11, 12:43 pm

1 Answer from Attorneys

Jonathan D. McDowell McDowell & McDowell, LLC

Even though you can still file, you could still be exposed to personal liability. A proper LLC filing could have protected you from certain kinds of liability, but it could be too late.

At this point, the acts taken before the formation of the LLC will still be attributable to the members of the LLC after formation. However, if you have complied with the corporate form requirements (substantial capitalization, annual minutes of meeting of members, not commingling corporate and personal assets and bank accounts, etc.) you could have a pro forma LLC and may be protected. You have to have supporting documentation for all years you want protection.

This is a very high hurdle to exceed and could be hard to prove. If you do not have these documents courts will probably view your business as a partnership. In that case, all the partners will be held personally liable for the acts of the partnership. If the company does dissolve, be careful because the partners can still be held liable for acts AFTER the dissolution if adequate notice is not given to creditors.

Jonathan

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Answered on 9/24/11, 2:12 pm


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