Prevent a Creditor from Piercing your Corporate Veil
If you think that the “Inc.” in your corporate name protects your personal assets from attack – think again. As a small business owner whose personal assets are depleting, it is tempting to use your business funds to pay your personal bills – writing checks from your business account to pay your family expenses. Before long, you may realize that your business has become undercapitalized and is hurdling towards insolvency. In such a situation, you leave yourself especially vulnerable to a creditor who wants repayment for his or her goods or services.
Yes, your personal assets can be in danger even after forming a formal corporate entity, which is supposed to protect you against personal liability. A litigant may try to get a hold of your personal assets through a legal maneuver called “piercing the corporate veil.” As the owner, director or officer of a corporation, you may be held personally liable if fraud was committed, corporate formalities were ignored, personal funds and company funds were commingled, or your company was grossly undercapitalized or had no capital.
What you may not know is that HUB offers Director & Officer Liability Insurance. This insurance may be your financial lifeline if a creditor attempts to seize your personal assets as a business repayment. To find out more, schedule a complimentary consultation with one of our Risk Professionals at www.RiskFirewall.com.
