Corporate Law Regarding an LLC, outstanding debt, and piercing the veil

[AGuest]

Greetings,

In July 2012, I formed a Delaware LLC and an LP - the LLC an investment management firm and the LP was a fund to be managed by the LLC (business was to operate in Maryland).

I was the sole owner and operator. I subscribed the business to a $12,000 annual data service. I never established any type of banking/credit account for the business, and so paid for this service with checks from my personal account. I never actually funded the LP and the LLC/LP both never had any assets. I planned to fund the LP with personal assets as well as assets from family/family friends I could interest in the venture, but never got to this step.

About three-quarters through the first year, I faced outside issues that essentially caused me to drop everything related to this project 100%. For these first 9 months, I was basically writing code in conjunction with the data service to setup the fund's trading platform. I missed the 3-month deadline for cancelling the annually recurring $12,000/year service and thus the LLC was signed up for another year of service. I never actually used this service after the first year (which I did pay for). I also did let Thomson Reuters know I no longer planned on running the business and that I no longer wanted the service prior to the beginning of the second year (just not three months in advance).

At the time, I simply didn't have the ability to deal with the proper method for closing a business, I basically planned to let the company stagnate and eventually be dissolved by the state as I submitted no tax forms, etc. past the the initial formation documents. The LLC is now being pursued for $9,000 that were never paid in the second year of the contract with Thomson Reuters.

Are there reasonable grounds here for them to pierce the corporate veil and come after my personal assets?
Should I respond to the legal group at all? What is likely to happen if I ignore them entirely? I would like to inform them of the overall situation as described above, but naturally only if it would actually help the situation in some way.

Thanks in advance!

 

[army judge]

I could answer you, OP, but I'll wait until one of my colleagues FrederikLaw appears.
His answers are always a great read.
You'll see, and it'll be worth the wait.
These questions seem to be his sweet spot.
Hold on, it'll be well worth the wait for both of us. LOL

 

[Michael Wechsler]

I'll try FWIW. Typically it is very difficult to pierce the corporate veil unless there is proof that the corporation was used interchangeably with a personal account. Another issue occurs when the company is undercapitalized, making it impossible for the company to address its bills and which is something that should be known by the incorporator. As to whether the legal group will try to sue the company and pierce the corporate veil, it's unusual for them to do so as it takes additional effort. However, in this case you were paying by personal check. Was the account placed under your name or in the name of the business? Is there any personal guaranty of payment in the agreement that you signed? That would make it unnecessary for Thompson to pierce the corporate veil and could come directly after you personally. I'd look into the words of the agreement specifically for the presence of such a liability provision.