Response to peer 2

Description

Piercing the corporate veil is a term that is used when business owners try to avoid personal liability by opening a corporation or LLC, which separates them from personal liability (Murray, 2021). That means their assets cannot be claimed in terms of debt recovery. In this week’s discussion question, we are presented with a similar case where the plaintiff claims Ms. Dominicana formed Alianza LLC to avoid being held responsible for the unpaid rent. The main issue is that Ms. Doiminicana transferred most of her assets to the newly formed LLC while she owed rent to Amsterdam Associates, LLC, which they cannot recover.

A limited liability company or LLC protects the business owner’s assets from the company’s dues. Corporate veil law varies from state to state. It requires a standard set of evidence to prove business instrumentality and business owners to be engaged in improper conduct.

In this case, what type of business Ms. Dominicana conducts needs to be clarified. It may or may not be a case of alter ego where business is a total sham to avoid paying the rent. Usually, personal assets are kept separate from the business, but here, Ms. Dominicana moved the assets into the LLC, raising red flags. Also, it is unclear when the business was established, and she may need proof of assets to get funds. Based on all these assumptions and unknown factors, it will be hard for Amsterdam Associates, LLC to prove that the business was a sham. They claim no employees in this business, but maybe Ms. Dominicana is the sole proprietor. Additionally, there are no examples of her conducting improper behavior or including illegal activities. Thus, there is not sufficient evidence to prove that the LLC was formed to avoid paying the rent.
References:

Murray, J. (July 12, 2021). ‘Piercing The Corporate Veil’ Explained. The Balance.
https://www.thebalancemoney.com/piercing-the-corpo…

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