Llc liability shield veil piercing and distributions · Select two

Apply the rule

Bluefin Charters LLC, organized under a statute that follows the uniform LLC act, is a manager managed company with three members: Kai Nakamura, who is the sole manager, and two passive investors, Priya Desai and Leo Marsh. In September 2026 the LLC had $210,000 in assets and $260,000 in liabilities, including a boat loan in default. Kai nonetheless caused the LLC to distribute $45,000 to the three members in equal shares, telling them "it's our money." Priya, who received $15,000, played no part in the decision. In October a customer injured on a charter obtained a $120,000 judgment against the LLC, which cannot pay it. The customer sues Kai, Priya, and Leo personally, and the LLC's lender challenges the distribution.

Which two of the following statements are correct?

Choose exactly two answers.

A. Priya is personally liable for the customer's judgment because members of an LLC are liable for its tort obligations.B. The $45,000 distribution was prohibited because, after giving it effect, the LLC's liabilities exceeded its assets.C. Priya owed the LLC a duty of care to block the distribution, because every member of an LLC owes the company fiduciary duties.D. The distribution was lawful because a manager may declare distributions in the manager's discretion whenever the company has cash on hand.E. Kai is personally liable for the customer's judgment because he was the manager in control of the LLC's operations.F. None of the three is personally liable for the judgment solely because of their status as member or manager, absent grounds for piercing the veil.

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Question ID: business-associations-mcq-c2-04 · Report an issue with this ID · Coverage and review status