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Does alter ego ONLY apply to an individual or can it apply to a company using another company to shield it from liability?

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HotelSwatTeam

Active Member
What is the name of your state? FL


Does alter ego ONLY apply to an individual or can it apply to a company using another company to shield it from liability?

For example, if a company owner quickly form another company in his wife's name and move all its assets over to the other company which did the exact same thing. Could alter ego be used on the second company which is effectively the first company?

Thanks.
 


Taxing Matters

Overtaxed Member
There are several potential ways a creditor of the first company might be able to go after the assets in the second depending on the exact facts of what occurred. The creditor would want to consult a civil litigation attorney about that.
 

HotelSwatTeam

Active Member
There are several potential ways a creditor of the first company might be able to go after the assets in the second depending on the exact facts of what occurred. The creditor would want to consult a civil litigation attorney about that.
I totally get that however right now I would like to know if alter ego can be applied to go after a company or ONLY a living breathing person.

I say that because under some definitions, a corporate is considered a person.
 

Taxing Matters

Overtaxed Member
Certainly the alter ego doctrine may be applied in a situation involving two limited liability entities (corporation, LLC, LLP, etc) as well as in the situation involving a natural person and a limited liability entity.
 

FlyingRon

Senior Member
I agree with TM. Understand that the alter ego/veil piercing really doesn't have anything to do with the entity they are trying to get to via bypassing the corporation/LLC that is fronting. It's whether the thing that is doing the fronting is really an independent entity or just a ruse to hide the other entity.

And if you try to layer them up to provide additional obfuscation, they can drill down through all the shams to find the real responsible entity. Layered organizations are like onions, they're smelly and make you cry a lot.
 

Litigator22

Active Member
What is the name of your state? FL


Does alter ego ONLY apply to an individual or can it apply to a company using another company to shield it from liability?

For example, if a company owner quickly form another company in his wife's name and move all its assets over to the other company which did the exact same thing. Could alter ego be used on the second company which is effectively the first company?

Thanks.
The literal meaning of the term "alter ego" means a person's alternative or secondary self.

In legal parlance it commonly applies to describe a circumstance whereby an individual or a consortium of individuals are engaged, or have been engaged in a business enterprise posing as a legal entity purportedly shielding the participants from personal liability. But for all internal purposes the participants have treated the activity without heed to the supposed legal entity. Hence, in theory they are not immune from personal liability.

The way in which you have posed your question appears to incorrectly assumes that the modifier applies in reference to someone or something to which the participants have no purported association.
 
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