If a Business Entity Is Created to Insulate Its Owners

question 44

True/False

If a business entity is created to insulate its owners from person liability beyond their contributions, a court will "pierce the corporate veil" and hold these people personally liable for obligations to their creditors because what they have done is considered a fraud on creditors.

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Definitions:

Bullying

involves unwanted aggressive behavior by another individual or group, often repeated over time, aiming to intimidate or coerce.

Zero-Tolerance Policy

A strict enforcement policy with predetermined punishments for certain offenses, without allowance for discretion or consideration of circumstances.

Moral Reasoning

The process by which individuals make decisions about what is right and wrong, based on personal, societal, or ethical standards.

Kohlberg's Theory

A theory of moral development proposed by Lawrence Kohlberg, suggesting that individuals progress through a series of stages in understanding and reasoning about moral issues.