LLC was 2 member, owned an apartment building in Chicago. that was the LLC's only purpose. the building was sold July 2014. proceeds were distributed to members roughly 2 weeks later (leaving about $3k in the bank account). about 2 months later, September 2014, we were notified that we were being sued for Chicago RLTO violations that occurred in March 2014. if the remaining assets are not sufficient to pay a judgment against the LLC, can I be held personally liable?
The LLC is in Illinois, and I live in another state altogether. My partner acted as an agent for the LLC when he performed landlord duties.UPDATE: I have spoken with several attorneys (and spent several thousand dollars), and read more law that i care to. it seems i can convince attorneys either way. thus - the attorney's i've found, having studied my specific situation, are both conflicting and without conviction. NEW QUESTION (i may post as a separate issue): please recommend a brilliant LLC attorney, preferably in Chicago, or even just Illinois. it's a straightforward question (not even RLTO specific), but very Illinois LLC specific. OLD INFOI should have prefaced my question: assuming the llc formalities were always followed, can the veil be peireced in this case?
Whether the LLC formalities were strictly honored ALL THE TIME cannot be known from your brief description. The LLC protections fall apart if they weren't So.....hire counsel for a complete review to set a plan. This will take some serious legal skill so don't try it yourself.
LLC members can have the corporate veil pierced. Courts look at about a dozen factors in determining whether to pierce or not. Be careful not defending and allowing a default judgment to take place as then the plaintiff could possibly pierce without needing to prove their case. Suggest hiring a litigator experienced in the substantive area of law to help defend the case or advise otherwise (bankruptcy?).
I am not your attorney unless we enter into an engagement agreement in writing and the above are merely general thoughts without being specific legal advice which is applicable to your situation.
Regrettably, to answer your question, detailed scrutiny into your particular situation is required. Any conclusion without such due diligence would be premature. I suggest you hire a competent attorney to assist with this matter as zoo has possible. Wish you the best.
First, I agree that this situation calls for legal counsel for you personally (as opposed to the LLC). However, it is an open question whether the veil of an Illinois LLC may be pierced. What is more, the Illinois Limited Liability Company Act specifically excludes failure to follow “usual company formalities” in considering the imposition of personal liability on the member of an LLC. See 805 ILCS 180/10-10(c)
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