Legal/Acctg, Can debt collectors come after bsns assets in an LLC, taxed as a ptnrship?
August 23, 2010 
2 Comments
Chris asked:
If two partners, set up as an LLC, with the state of GA and federal govt's. Then they go ahead and file a partnership tax return, to be 50/50 equal partnership. Would one of the partners previous debt collectors, be able to come after the business assets.
If two partners, set up as an LLC, with the state of GA and federal govt's. Then they go ahead and file a partnership tax return, to be 50/50 equal partnership. Would one of the partners previous debt collectors, be able to come after the business assets.
true life story here.
Person is worried his partner will be suseptable to losing her, capital that she put into the business. Is this the case? ? ?
what the person needs to be concerned with is….. has the limited liabilty corporation veil ever been pierced??
sounds technical, well it is. the only way to be sure is to discuss the issue with an attorney who is versed in llc law in your state. it seems that a llc is truly limited in its liability based upon the operation and procedures it uses in the normal and everyday operation of the llc.
that is a llc should be operated in such a fashion as to protect and maintain the "veils" integrity to maintain it's protections and limitations of and under the law and it's intention.
it appears that to operate in a way or manner that is afforded the protections of llc law you must not have deviated from that manner and to do so would be to put the llc and it's veil in jeopardy and hence non-existent if found to be pierced. (veil)
The likely outcome will also depends on what kind of debts this partner has and under what circumstances. If the partner is personally liable, then the collectors can go after all his/her asset which would include the new LLC/partnership.
As previously suggested it is best you speak with a legal professional who is familiar with your local rules.
Best wishes.