Bits & Bridles Company was owned by the Miller family, which included Hank and E
ID: 387310 • Letter: B
Question
Bits & Bridles Company was owned by the Miller family, which included Hank and Edith Miller and their son, Samuel. When the corporation was established, the Millers estimated that they would require a minimum of $20,000 per year in operating costs. They had only $10,000 when they started the corporation and did nothing to raise further funds. The business operated at a loss for more than five years. Eventually, Bits & Bridles was sued by an unhappy creditor who had not been paid. The creditor sought to have the Millers held individually responsible for the debt.
In this situation, how would a court rule in terms of holding the Millers personally responsible for the company's unpaid debt?
a. The court would be unlikely to pierce the corporate veil because the corporation had not violated any rules. b. The court would be is likely to pierce the corporate veil because the corporation was never set up to make a profit. c. The court would be is likely to pierce the corporate veil because the corporation failed to have regular meetings. d. The court would be unlikely to pierce the corporate veil because the corporation was a close corporation.Explanation / Answer
d. the court would be nlikely to pierce the corporate veil because the corporation was a close corporation. because it is a close corportaion only owner of the corporation are personally liable to pay the debts.
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