Legal Question in Business Law in Massachusetts

Re: Limited Liability Company

An LLC has shareholders. A shareholder in an LLC is only liable for his investment made in the LLC. Hence, if the LCC goes bankrupt, a creditor cannot go after your personal assets directly.

However, in practice, a shareholder may have to pledge personal assets as collateral to secure credit for the LCC. In such cases, then the creditor can go after your personal assets.

Re: Limited Liability Company

An additional point. Your personal assets might be reachable if one or more creditors were able to demonstrate that: (1) the LLC was formed, or used, for purposes of fraud, and/or (2) was simply a sham or a shell company through which you conducted personal business, and/or (3) the LLC was designed to inapropriately shield you from personal liability. This is called "piercing the corporate veil;" the "veil" being the usual legal protection from personal liability, which is "pierced" if the protection is unwarranted based on inappropriate/illegal conduct.

Also, if the LLC was held out to others as another business, or was inappropriately co-mingled with another business or businesses, or was co-mingled with other businesses in furtherance of fraud or in bad faith, the LLC's "corporate veil" might also be "pierced," and its creditors might then reach the assets of the other co-mingled businesses and, if those assets are insufficient, might then reach the personal assets of the principles.

Piercing the corporate protections, however, requires a high standard of proof and is difficult to do. But if inappropriate wrongdoing is evident, the law will not reward the bad acts by allowing the bad actor to hide behind legal protections, especially to the detriment of others doing business with the LLC in good faith.

Re: Limited Liability Company

As long as you follow the distinctions between LLC and your self and act in a proper business way, no they can't come after you personally unless you personally guarantee what you are doing.

Moreover, it is not a protection for professional malpractice or tortous conduct such as fraud, if you personally act in such a manner. Otherwise no they can't pierce the LLC and come after you.