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by rayiner5 hours ago |
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upvoteby Aurornis3 hours ago|
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> Running a corporation or LLC without sufficient capitalization can be grounds for piercing the liability shield in a lawsuit.

Which is exactly how it should be handled, IMO: Deal with the abuse situations directly.

Forcing new companies to capitalize with an arbitrary amount of money at time of founding penalizes small players who want to start a company. It's also not a hurdle at all for large players who want to commit large frauds.

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upvoteby kazinator1 hours ago|
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> penalizes small players who want to start a company

That's a barrier to entry; and who likes to perpetrate those? Why big, established companies who lobby the government.

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upvoteby dyauspitr3 hours ago|
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Is the gmbh pierce proof? Because then I like the situation where if you start with $25,000 under no circumstance can they get past the liability shield.
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upvoteby Sebb7672 hours ago|
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Usually, yes. There are a few exceptions, such as serious misconduct, tax fraud and not declaring insolvency when necessary. But as long as you're following the law, you're fine.
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upvoteby Zak5 hours ago|
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I have the impression the situations where that actually happens are at least arguably serious misconduct, and usually targeted at someone with significant assets.

A construction company that pockets ten million dollars and doesn't build anything probably can't shield its owner this way, but a single-developer software consultancy that pockets ten thousand dollars and delivers buggy code can.

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upvoteby rayiner5 hours ago|
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In theory it’s based on whether the owner of the company intended to run it under capitalized in an effort to shirk liability.
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upvoteby jt21904 hours ago|
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But the larger point still stands: Limited liability was granted “on the front end” without the entity needing to demonstrate a minimum amount of capital. You’re only pointing out that in the U.S. that it’s possible that “on the back end” the owners of the entity might become personally liable.
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upvoteby rayiner2 hours ago|
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Yes, i’m just elaborating on OP’s point. The US system is different and basically more optimistic on the front end.
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upvoteby 4 hours ago|
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upvoteby graemep1 hours ago|
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Much the same in the UK. Usually some kind of fraud or failing to stop trading when it was obvious insolvency was unavoidable. No minimum capital requirements either.
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upvoteby nekusar3 hours ago|
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Thats cause the software and computing industry early on, disclaimed all liability.

"Computers are hard, yo!". It devalues the profession.

And I thought no liability was bad enough... But no. Now its LLMs and " for entertainment purposes only". I take it management and leadership also read that, and don't give one fuck.

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upvoteby Zak2 hours ago|
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The ability to build reliable software has existed for a long time. Commercial airlines make heavy use of it, and serious failures are vanishingly rare.

The problem is building software to those standards of reliability is expensive and slow. Consumer software never justifies it. Business software rarely does. If you want me to accept liability for the consequences of bugs in code I write, I'm giving you a schedule five times as long and a price twenty times as high.

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upvoteby ApolloFortyNine1 hours ago|
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>Commercial airlines make heavy use of it, and serious failures are vanishingly rare.

Is this a joke? There's a major outage effecting flights at least yearly. The Delta one is from May...

[1] https://en.wikipedia.org/wiki/2022_Southwest_Airlines_schedu... [2] https://www.usatoday.com/story/travel/airline-news/2026/05/0...

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upvoteby sarchertech1 hours ago|
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The OP is talking about the software onboard airplanes, not the operational software used by airlines.

They should have said aircraft manufacturers, not airlines, but it’s clear what they meant.

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upvoteby paulsutter4 hours ago|
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While extreme cases are the easiest to imagine, in real life the plaintiff almost always argues to pierce the veil and the defendant always argues the opposite, and both sides earnestly believe that they are right.
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upvoteby jobs_throwaway4 hours ago|
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And in real life piercing the veil is extremely exceptional
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upvoteby TheOtherHobbes53 minutes ago|
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It's so exceptional in the UK you can run a series of fraudulent businesses which are incorporated, "buy" services, don't pay for them, then declare themselves insolvent, rinse and repeat, and there's a fair chance you'll get away with it.

It's called phoenixing. There are good few bans for it every year, but almost no convictions for fraud.

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upvoteby kyleee33 minutes ago|
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Not to mention all the fraud the Turkish barbers etc are up to
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upvoteby CPLX4 hours ago|
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Yeah but the veil doesn’t get pierced that’s super rare, which is more important than everyone’s emotional state.
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upvoteby sarchertech1 hours ago|
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Not in the US it’s not. LLCs don’t shield your assets from personal negligence. So if you have a single member LLC with no employees (very common), an awful lot of what prompt a successful suit will be because of negligence on your part.
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upvoteby gunapologist992 hours ago|
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Have to prove fraud to get there. "Under" capitalization is a judgment call. Effectively, it's very rare. An LLC launches with effectively zero dollars literally dozens of times a day.
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upvoteby glad_duck1 hours ago|
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Haven't heard anything about LLC capitalization in this context. Liability shield can be pierced, but only if LLC is misused (i.e. "when the company is treated as a personal "alter ego" and used to commit fraud, injustice, or illegal acts"). Lack of capitalization is not one of the reasons as long as you treat it as a company, not your wallet.
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upvoteby sarchertech1 hours ago|
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No there’s lots of reasons it can’t be pierced. It doesn’t shield you from liability that results from your own negligence, and for owner operator businesses that’s a large attack surface.
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upvoteby woah2 hours ago|
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This is a core difference between common law and civil law. In common law systems, things tend to get sorted out after the fact, with a judge's discretion, only if things go really wrong. In civil law systems they try to design a perfect system of laws that makes problems impossible.
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