Legal Question in Credit and Debt Law in Michigan
Co-mingle LLC and Personal Funds in a Bank Account
When the LLC''s agent co-mingles personal funds and an LLC's funds in a bank account of the LCC, are the funds still protected from creditor collection (money judgment)under the LLC? Could the account be garnished and funds used to satisfy a judgment against the agent personnally?
2 Answers from Attorneys
Re: Co-mingle LLC and Personal Funds in a Bank Account
If the creditor suspected that the individual was attempting to hide funds, then the court WOULD have the authority to investigate. The fraud would be a reason to cause a third party (the LLC owners) to answer for funds in an account, because that moeny would not belong to the LLC. Further, it would be, presumably, outside of the authority of the agency relationship to place in the account. Can't have it both ways, the question si whether hte creditor will find out about it and alert the court. If this happens, the agent will be open to all sorts of court penalties, the LLC owners as well.
Re: Co-mingle LLC and Personal Funds in a Bank Account
There are no major Michigan cases regarding piercing the viel of a LLC, however, it is more difficult for a creditor to gain access to these funds than by simply showing a comingling. Even where the LLC and the principal or shareholder have blurred the boundaries so much that the LLC is an alter ego of the shareholder, one must also demonstrate fraud, injustice or deceict by the parties in the LLC.