Legal Question in Business Law in California

Re: Commingling a LLC

It is possible to sue an LLC after is is dissolved.

You may not understand what is meant by commingling. This term refers to putting money belonging to two different persons - a husband and wife, two business partners, a corporation and its majority owner, or an LLC and its owner(s), for example - into a single cash drawer, cigar box, pants pocket, bank account, safety depoit box, buried tin can, stock market investment, or whatever, without keeping sufficient records so that ownership of the funds can be unscrambled with any degree of certainty later on.

When corporations or LLCs and their principal owners commingle money or like assets, they run a substantial risk that a court may choose to disregard the separate nature of the business and the owner - since the owner has already gone down that path - when disregarding the business entity's liability-preventing shield is helpful or necessary to giving a party that would be harmed by such conduct a suitable judgment in a suit against the business entity.

It is not commingling just because an LLC or corporation that is being dissolved and liquidated receives funds in the course of winding up its affairs. It is commingling, however, when a business entity - whether in liquidation or not - puts its funds directly into its owner's bank account without some further justification or at least meticulous record-keeping.