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Why creditors should know what it means to “pierce the corporate veil”

On Behalf of | Apr 22, 2024 | Business Debt Collection, Commercial Debt Collection, Experienced Debt Collectors

On occasion, a corporation may appear destitute, even defaulting on its financial responsibilities and unable to satisfy its debts. Meanwhile, its shareholders or business owners appear flush with cash. This scenario can be frustrating to a debtor. When it seems as though an individual is hiding behind the corporate structure of their company, it is understandably infuriating.

At Law Offices of Alan M. Cohen & Associates LLC, our Massachusetts commercial collections attorneys are respected for their aggressive and relentless ethical debt collection strategies and tactics. We have successfully pierced the corporate veil to collect on debts from the creditor company’s owners or shareholders.

What is the corporate veil?

When business owners choose a corporate structure for their business entity, under Massachusetts law, different corporate structures provide different advantages. One of the most important advantages of choosing a corporation or a limited liability company (LLC) is the financial protection the corporate structure provides to separate a business entity from its owners.

Business owners are not personally liable for the debts, liabilities or actions of their company under certain protected business structures. In plain English, this means that a corporation can struggle financially and default on its debts and the owners do not have to contribute their own assets and wealth. Unless the debtor can pierce the corporate veil.

What does it mean to “pierce the corporate veil”?

When a creditor succeeds at piercing the corporate veil, the veil of protection between the company and its owners is lifted. Legally, the rights or liabilities of a corporation become the rights or liabilities of its shareholders.

A creditor may be able to pierce the corporate veil if:

  • The court suspects fraudulent or dishonest conduct.
  • There is a mingling of personal and corporate affairs.
  • The company is inadequately capitalized from the start.

Of course this is an oversimplification. The myriad of factors are very nuanced. However, If you are trying to collect on a debt and it appears that your debtor is hiding behind the protective shield of a corporation, you may be able to pierce the corporate veil to reach the personal assets of the individuals behind the debtor corporation.

How can an aggressive and relentless commercial collections attorney help?

At Law Offices of Alan M. Cohen & Associates LLC, we fight to get you paid. With over 50 years of experience, we artfully employ aggressive, relentless, and ethical debt collection methods. We don’t shy away from tough cases:

  • We analyze a corporation’s structure to look for signs of fraud or misuse.
  • We gather evidence of commingled assets and undercapitalization and the other nine or so factors.
  • We craft compelling arguments to present to the court.

We understand your frustration when debts remain unpaid. It’s not just about the money; it’s about the principle. That’s why we take every legal avenue allowed to us under state and federal laws to hold those responsible for your losses accountable.

Take action today and consult a commercial collections lawyer

Don’t let a corporation’s veil of protection stand in the way of what you are owed. If you are dealing with a business debt in Massachusetts that seems impossible to collect, let us assess your case. Once we understand the facts of your case, we will be able to tell you if there is a way we can help you secure payments that are rightfully yours.

Contact us today to schedule a consultation. You can reach us by sending an email through our website or calling our office at 508-763-6604. Let us be your ally in the fight to get you paid.