978-1285770178 Case Printout Case CPC-04-08 Part 1

C.A.7 (Ill.),2012.

quired to pierce the corporate veil.

101k1045 k. Undercapitalization. Most Cited Cases

Under Illinois law, when determining whether a unity of interest and ownership exists, as required to pierce the

corporate veil, the adequacy-of-capitalization factor compares the amount of capital to the amount of business to be

conducted and obligations to be fulfilled; without adequate capitalization, a corporation becomes a mere liability

shield, rather than an independent entity capable of carrying on its own business.

101k1045 k. Undercapitalization. Most Cited Cases

Under Illinois law, adequate capitalization exists, and weighs against finding that unity of interest and owner-

ship exists, as required to pierce the corporate veil, when a corporation has sufficient equity without considering

loaned funds or encumbered assets.

Under Illinois law, shareholders are generally expected to invest some money if they want the benefit of limited

liability conferred by the corporate veil.

[16] Corporations and Business Organizations 101 1060

to pierce corporate veil under Illinois law and hold corporate insiders personally liable for $2.4 million judgment

obtained against corporation for failing to pay debt arising out of margin transactions; even if at certain times corpo-

ration had assets in addition to its $1,000 in paid-in capital, those assets were encumbered by a line of credit, and

corporation held itself out as thinly capitalized.

101 Corporations and Business Organizations

101II Disregarding Corporate Entity; Piercing Corporate Veil

101k1057 Particular Occasions for Determining Corporate Entity

101k1070 k. Shareholders, officers, and corporation, rights inter se. Most Cited Cases

District court did not clearly err in finding that corporation failed to maintain arm’s-length relationship among

related entities, in support of determination that unity of interest and ownership existed between corporation and

insiders as required for brokerage firm to pierce corporate veil under Illinois law and hold insiders personally liable

for $2.4 million judgment against corporation for failing to pay margin debt; corporation received loan, from entity

controlled by dominant insider, that was structured to avoid corporation’s creditors by ensuring that its assets were

fully encumbered by blanket lien in favor of dominant insider, and corporation also shared office facilities with, and

moved employees between, related entities.

101k1037 k. Justice and equity in general. Most Cited Cases

Corporations and Business Organizations 101 1038

101 Corporations and Business Organizations

[25] Corporations and Business Organizations 101 1037

101 Corporations and Business Organizations

101II Disregarding Corporate Entity; Piercing Corporate Veil

101k1042 Factors Considered

101k1045 k. Undercapitalization. Most Cited Cases

Corporations and Business Organizations 101 1052

101k1052 k. Related corporations in general. Most Cited Cases

Illinois law endorses corporate-veil piercing to avoid unfair enrichment, to avoid permitting the creator of a

corporate liability and cause of the corporation’s inability to meet that liability to escape responsibility, and to avoid

allowing a corporation to keep assets in a liability-free corporation while placing liabilities on an asset-free corpora-

tion.

101k1060 k. Debts and obligations of corporation in general. Most Cited Cases

District court did not clearly err in finding that adherence to separate identities of corporation and insiders

would sanction fraud or promote injustice, as required for brokerage firm to pierce corporate veil under Illinois law

and hold insiders personally liable for $2.4 million judgment against corporation for failing to pay margin debt; in-

siders used web of related entities to create false appearance that corporation could cover potential losses on margin

101XI Insolvency and Receivers

101XI(B) Fraudulent Conveyances and Preferences

101k2841 Conveyances When Insolvent or in Contemplation of Insolvency

101k2846 k. Transfer to another corporation having same directors, officers, or shareholders. Most

Cited Cases

before and after transfer. S.H.A. 740 ILCS 160/2(l ), 160/5(a).

[28] Fraudulent Conveyances 186 298(.5)

186 Fraudulent Conveyances

ing evidence. S.H.A. 740 ILCS 160/5(a)(1).

[29] Federal Courts 170B 932.1

District court erred in finding that corporation’s payment to Internet-based golf tee time reservation business

was fraudulent conveyance as to brokerage firm to which corporation owed margin debt, and thus order voiding

payment would be vacated, where district court stated near the end of trial that it would not rule on any fraudulent

transfer that was not charged in brokerage firm’s complaint, and payment at issue was not so charged.

170Bk915 k. In general. Most Cited Cases

Corporation and insiders waived argument on appeal, that district court erred in finding that corporation’s pay-

ments to insiders were fraudulent transfers as to brokerage firm to which corporation owed margin debt because

brokerage firm did not allege in its complaint that payments to insiders were fraudulent, where corporation and in-

siders failed to raise issue in their opening briefs on appeal.

170BVIII(K)5 Questions of Fact, Verdicts and Findings

170Bk870 Particular Issues and Questions

170Bk878 k. Costs and attorney fees. Most Cited Cases

Court of Appeals gives a district court’s attorney fees decision great deference because of the court’s familiarity

with the case.

101k1090 k. Costs and attorney fees. Most Cited Cases

Under Illinois law, a party who prevails on a veil-piercing claim may recover their fees if there is an underlying

contract that provides for a fee award.