East Orange, NJ asked in Business Law for New Jersey

Q: My wife and I ran a small LLC for five years. Slow sales are forcing us to close in Feb. 2020. In the meantime, FedEx i

We ran a business with best intentions but lost lots of money, and I feel it is wrong for others to sue wy wife who is the CEO while we hoped for some Corporation protection from personal assets. Can we ask the court to remove my wife from the lawsuit and deal with the corporation only? What is the risk if we do not respond to the corporation lawsuit. Also, can we try and what is the outcome if we try to explain in person when my wife's court date arrives.

Thank you very much

Dariusz and Rosalie

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2 Lawyer Answers
Leonard R. Boyer
Leonard R. Boyer
Answered
  • Clifton, NJ
  • Licensed in New Jersey

A: No your wife is a proper party to the lawsuit. Only a properly set up LLC with 3 members or more will protect you from personal liability. Depending on your overall situation you should retain either an experienced civil litigation or bankruptcy attorney. To determine how you should proceed an in person consultation is necessary.

Paul J. Riviere
Paul J. Riviere
Answered
  • Jackson, NJ
  • Licensed in New Jersey

A: Ignorance is never bliss in the legal world. The protections to you and your wife as members via the LLC are not unlimited. Courts will “pierce the corporate veil” and allow personal liability to attach to individual members for debts and obligations of the LLC if:

- the LLC was used as an extension of the members personal affairs

- a member was reckless during the course of business that caused harm to the company or to someone else

- or to prevent the LLC from being used to defeat the ends of justice, to perpetrate a fraud, to accomplish a crime, or to otherwise evade the law.

Your case needs the attention of a business litigation lawyer to come up with a good strategy to defend against the lawsuit you are faced with.

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