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

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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