In Walmsley v. Ehmann, plaintiffs obtained a judgment against a defendant that held a 50% interest in a limited liability corporation. Plaintiffs sought to pierce the corporate veil of the LLC to enforce to judgments against the defendant personally. Plaintiffs argued that the sole purpose of the LLC was to hold the stock of another corporation, as the sole shareholder. The court, however, stated that an LLC need not adhere to the same formalities as a corporation, and any lack of formalities must lead “to some serious misuse of the corporate form” to allow the corporate veil to be pierced. Since plaintiff could not prove that the LLC was established to defraud creditors or for another improper purpose, the court would not pierce the veil, and dismissed the case.
Thanks to Colleen Hayes for her contributions to this post.
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