The LLC does not protect against either criminal or tortious conduct.

I read an interesting case recently in the bankruptcy reporter. Apparently the bankrupt had issued checks which had bounced. The creditor objected to the discharge of his debt because it was criminal/intentionally tortious conduct. Criminal conduct and intentionally tortious conduct involving defalcation of funds are non-dischargeable in a bankruptcy.

The court ruled that at the time the bankrupt had issued the checks he was expecting to receive sufficient funds to cover them. These funds never arrived.

The court ruled that the bankrupt's conduct was neither criminal nor intentionally tortious. The court further ruled that the bankrupt's conduct was at worst bad business judgment.

Give you some idea of what to expect when you are trying to collect from a bankrupt client? The protection afforded to a bankrupt by both the court and the trustee is incredible. to post a reply: login - or - register