Journal of Corporate Renewal

April 2017

Elizabeth (Lisa) B. Vandesteeg is a partner at Sugar Felsenthal Grais & Hammer LLP in its Chicago office. She concentrates her practice in the areas of bankruptcy, commercial litigation, business disputes, and privacy and data security issues. She has been repeatedly recognized as an Illinois Super Lawyer, and she is a sought-after speaker. Vandesteeg has been an associate editor of the ABI Journal for several years and is also on the board for the Chicago Network of IWIRC.

Jonathan Friedland is a partner with Sugar Felsenthal Grais & Hammer LLP in its Chicago office. He regularly advises private funds and private companies and their respective boards through a variety of challenging situations, including in Chapter 11 and other insolvency regimes. Friedland holds the highest possible rating from Martindale-Hubbell, has been repeatedly recognized as a Super Lawyer in business/ corporate law and bankruptcy and creditor/debtor rights, and has received other similar distinctions.

He is also the founder of DailyDAC/Financial Poise.

and collection appears likely.

However, creative solutions exist. J

The authors thank Tricia Schwallier for her assistance with this article. The case discussed in this article was litigated by the authors, who represent several litigation funding firms.

1 Van Dorn Co. v. Future Chem. & Oil Corp., 753 F.2d 565, 569 (7th Cir.1985) (citing Main Bank of Chi. v. Baker, 86 Ill.2d 188, 56 Ill. Dec. 14, 427 N. E.2d 94, 101 (1981)).

2 Wachovia Secs., LLC v. Banco Panamericano, Inc., 674 F.3d 743, 751-52 (7th Cir. 2012) (internal quotations omitted); see also Fontana v. TLD Builders, 362 Ill.App.3d 491 (2005); Hystro Prods., Inc. v. MNP Corp., 18 F.3d 1384, 1388- 89 (7th Cir.1994); Koch Ref. v. Farmers Union Cent. Exch., Inc., 831 F.2d 1339, 1345 (7th Cir.1987) (quoting In re Kaiser, 791 F.2d 73, 75 (7th Cir.1986)); Van Dorn, 753 F.2d at 569-70.

3 In determining whether there is sufficient unity of interest and ownership to pierce the veil, courts analyze the following factors: ( 1) inadequate capitalization (opening a corporate bank account with minimal cash);

( 2) failure to issue stock; ( 3) nonpayment of dividends; ( 4) nonfunctioning officers or directors; ( 5) absence of corporate records;

( 6) insolvency of debtor corporation;

( 8) commingling of funds; ( 9) diversion of corporate assets to a dominant shareholder,

among others. Dimmitt & Owens Fin., Inc. v.

Superior Sports Prods., Inc., 196 F. Supp.2d

731, 738 (N. D. Ill.2002) (citing Jacobson v.

Buffalo Rock Shooters Supply, Inc., 278

Ill. App.3d 1084, 215 Ill.Dec. 931, 664

N. E.2d 328, 331 (1996)). “[N]o single factor
is determinative in deciding whether to
disregard a corporate entity.” Id. (citing In
re Estate of Wallen, 262 Ill. App.3d 61, 199 Ill.
Dec. 359, 633 N.E.2d 1350, 1357 (1994)).

4 Van Dorn, 753 F.2d at 570.

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