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Piercing the Corporate Veil

In Indiana, it is difficult to go after a business owner’s personal assets in a commercial setting, if

the business owner has a properly formed corporation or company and properly limited his or her liability; it is difficult, but not impossible.

A party seeking to pierce the corporate veil bears the burden of establishing that the corporation was so ignored, controlled or manipulated that it was merely the instrumentality of another, and that the misuse of the corporate form would constitute a fraud or promote injustice." Gurnik v. Lee, 587 N.E.2d 706, 710 (Ind.Ct.App.1992). Likewise, Indiana courts are reluctant to disregard a separate corporate entity. Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d. 1228, 1232 (Ind. 1994); Oliver v. Pinnacle Homes, Inc., 769 N.E.2d. 1188, 1191 (Ind.Ct.App. 2002). The courts will disregard a corporate entity only to prevent fraud or unfairness to third parties. Id. The legal fiction of a corporation may be disregarded where one corporation is so organized that it is a mere instrumentality or adjunct of another corporation. Id; Smith v. McLeod Distributing, Inc., 744 N.E.2d. 459, 462 (Ind.Ct.App. 2000). Indiana courts may refuse to recognize corporations as separate entities where the facts establish that several corporations are acting as the same entity. Id.

In deciding whether the party seeking to pierce the corporate veil has met its burden, Indiana courts consider whether the party has presented evidence showing:

1) undercapitalization;

2) absence of corporate records;

3) fraudulent representation by corporation shareholders or directors; <