It’s not. A lot of weight should be put on the concept of “legitimate business”.
Let’s say you decide to open up a car dealership and you use an LLC to buy cars then transfer them to another LLC and sell them. Then declare bankruptcy on the one containing the bills. You won’t be shielded, and you’ll likely go to jail for fraud.
The construction is to allow a business to go bankrupt with limited liability not to allow the expense account of a business to go bankrupt.
It’s not. A lot of weight should be put on the concept of “legitimate business”. Let’s say you decide to open up a car dealership and you use an LLC to buy cars then transfer them to another LLC and sell them. Then declare bankruptcy on the one containing the bills. You won’t be shielded, and you’ll likely go to jail for fraud.
The construction is to allow a business to go bankrupt with limited liability not to allow the expense account of a business to go bankrupt.