LLC Dissolving

[alinford]

What is the name of your state? Utah

I was a member of an LLC that never made any money, and has now been dissolved after about 16 months. There is one outstanding bill that is due. It was signed for by one of the other LLC members, but as an LLC member, not personally. The contract that was signed had a personal liability clause that was removed and initialed prior to signing.

The company that is owed the money is trying to pierce the corporate veil in order to come after LLC members (mainly me) for the money.

The plaintiff subpoenaed the bank for the LLC's bank account history. I also received a "request for documents" in which the plaintiff is "requesting" about 9 months of my personal bank statements. I would rather not provide my personal bank account info.

Question 1:
Should we declare bankruptcy for the LLC? (There are no assets of any kind.)

Question 2:
Since it is a "Request" (not a subpoena) for my personal bank info, am I compelled to provide it?

Question 3:
I am required to respond to the request documents. If I am not compelled to provide the bank account info, how should I respond?

 

[tranquility]

1. Declaring bankruptcy is a decision you should talk to a BK attorney about. It will not help much in the suit beyond getting a stay.

2. A request for documents is not a request, it is issued to a party opponent and must be dealt with.

3. The way to deal with it depends on how the suit is worded. You could get a protective order or you can get the opponent to go through a motion to compel. How to deal with the request is a matter of strategy and tactics.

I'm assuming you've been sued. You may be able to get out of it early. You will need an attorney to help you. If you are not a party opponent, you would not need to respond to the request for personal information but would need to as to the LLC's records requested.

 

[alinford]

Thanks for the reply.

1 - I thought as much.

2 - I understand that it must be dealt with and that I must respond, but there has been no judgment that the corp veil will be pierced, so why would I need to supply personal banking information? Can I request their personal banking information as part of my defense?

3 - I am not being sued (yet), but the plaintiff is attempting to pierce the corp veil in order to make me personally liable for the LLC's debt, at which time they would sue me.

 

[tranquility]

If you, personally, have not been named in the suit, you are not yet a party opponent. *IF* this is the case, you do not need to respond to a request for personal information in a request for documents. However, the other party can then issue a subpoena or can amend their complaint to add you so you aren't really getting anywhere.

Your personal banking information could be considered relevant in determining whether you operated the LLC as an alter ego. It could very well be an issue in the case. The reverse is not true. Sorry.

Get an attorney. Make the opponent state their claim and deal with it approapriately.