Question

Johnson Trucking, Inc., owned by Pat Johnson, charged its fuel purchases to an account at Juice Express. When Johnson Trucking, Inc. was not paid on several jobs, it was unable to pay amounts owed to Juice. Shortly thereafter, Johnson Trucking, Inc. ceased doing business and was dissolved. However, Pat continued to provide trucking services as a sole proprietor. Juice sued Pat Johnson for the unpaid amount – about $35,000. Pat argued that he was not personally liable for corporate debt. What are the factors the court will consider in deciding whether or not to pierce the corporate veil? Should the court pierce the corporate veil? Why or why not?

Answer 1

Respected sir/ma'am,

The answer for the above question is:

Factors that court will consider in deciding to pierce corporate veil:

1. Manipulations of Financials thus causing injustice to the stakeholders.

2.Use of the company as a market front

3.The company and its owners are not really divided.

4. Causing injustice to the creditors.

Court may decide to pierce the corporate veil:

Reason:

In this case Johnson Trucking, Inc. ceased doing business and was dissolved.

However, Pat continued to provide trucking services as a sole proprietor(Assuming with

the same employees and same assets)-carrying the similar by Pat will leads cause the existense

of injustice its creditors,ie.,Juice,Hence the court may decide to pierce the corporate veil.

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