In July 2015, the Illinois Bar Journal published Partner Sandra Mertens’ article titled “Can You Pierce the Veil of an Illinois LLC?” The article distinguished Illinois limited liability companies (“LLCs”) from LLCs of other states and corporations generally, concluding that 1998 changes to the Illinois Limited Liability Company Act potentially removed a creditor’s ability to pierce the “veil” of limited liability protection afforded to the owners of an Illinois LLC. The article described recent state and federal court decisions wrestling with the issue, and potential arguments on both sides pending further guidance by the Illinois Supreme Court or the legislature.
Although seven years have passed since the article was published, the legislature has not revised the relevant provision of the Illinois Limited Liability Company Act addressing the liability of members, and the Supreme Court has not faced a dispute involving this issue.
GCK is proud to announce, however, that Sandra’s article was cited by the Illinois Appellate Court in its decision for Lewis, Yockey & Brown, Inc. v. Fetzer, 2022 IL App (4th) 210599, ¶19-21 (June 9, 2022) available here. In the opinion, the Appellate Court for the Fourth District of Illinois agreed with Sandra’s reasoning that the Illinois legislature’s 1998 revisions to the Illinois Limited Liability Company Act limited members’ liability for company debts to only those conditions expressly stated in the statute. As far as the court was concerned, a creditor may not otherwise pierce the “veil of limited liability” afforded to owners of an LLC.
While uncertainty remains because neither the First District of Illinois (including Chicago) nor the Illinois Supreme Court have weighed in on this issue, Sandra’s logic outlined in her 2015 article remains at the forefront of LLC law in Illinois.