Tag: start-up

Must a Limited Liability Company make distributions to its members?

What happens when a member of a Limited Liability Company (LLC) wants an interim distribution, but the other members don’t?  An issue that may arise in a closely held-business formed as an LLC.  LLCs, unlike corporations, are treated as pass-through entities for federal tax purposes, members are taxed based on their interest in the LLC and their proportionate income, whether or not a distribution is made (while it is possible to treat the LLC as a corporation for tax purposes, this is the subject for your CPA or tax adviser to discuss). A member may be allocated income from the company, but may never receive a distribution related to that money.  Some members may not be able to pay taxes on money never received and may demand a distribution. This is one of many issues that may arise in a closely held LLC that can be mitigated in advance with a well drafted operating agreement. 

When forming an LLC with multiple members, a well drafted operating agreement is important for documenting ownership interest and governance of the LLC.  The operating agreement, like many contracts, is used to define the rights and obligations of the parties (members).  Illinois does not require specification as to the ownership interest of each member when filing the Articles of Organization. Further, Illinois does not require that all members be listed, only members with management authority.  

While there are numerous rights and obligations that may be outlined in an operating agreement, this article focuses on rights of distribution, when the company makes a transfer of money, property or other benefit to a member or a party with the member’s ‘distributional interest.’

Default Rule (no Operating Agreement):

The default rule, based on the Limited Liability Company Act (805 ILCS 180), is for distributions to be made in equal shares to the members.  The Act does not provide for mandatory or compelled distributions to members, except when the company is winding up its business.  Many operating agreements may mirror the statutory restrictions on distributions, but may include additional provisions and criteria for distributions. 

Time and Consent for Distribution (in Operating Agreement):

Members may wish to outline the timing and consent for distributions.  The Act does not specify a timing mechanism or voting requirement to make a distribution to members.   An operating agreement can dictate when a distribution is made to the members of the company and may outline the authorization needed for a distribution, including unanimous or majority consent by all members, or only certain members.  The operating agreement can also include requirements for distributions to members when tax liability is incurred. 

Restrictions on ‘Distributional Interest’:

Section 15-5 of the Act restricts what may be altered by an operating agreement, including the restriction of the rights of a person, other than a manager, member, and transferee of a member’s ‘distributional interest.’  Since a ‘distributional interest’ is treated as personal property and may be transferred in whole or in part, a member’s ‘distributional interest’ may be used to satisfy a third-party’s (often a creditor’s) claim against the member, without transferring the other rights held by the member.  Restricting that third-party’s right to a ‘distributional interest’ in the operating agreement violates the Act.     

Additionally, members should be mindful of circumstances when distributions may not be made, regardless of what the operating agreement may state.  A Distribution should not be made, when the LLC would not be able to pay its debts as they become due in the ordinary course of business; or when the assets of the LLC would be less than Liabilities and the amount needed to dissolve.  Individual members may be liable to the LLC for any amount of distribution that exceeds the amount that could have been distributed without violating the prohibitions on distributions.  So even if a distribution is made, but the company is indebted to third-party creditors, the creditors may seek the turnover of those funds from the member.   

When forming an LLC with multiple members, it is important to have a well drafted operating agreement, which may be worth the time and costs of a lawyer to draft and review.  

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between The Law Office Of Christian Blume, LLC or Christian Blume and the user or browser.

Update to Limited Liability Company Act: Members and Managers may be liable for own wrongful acts or omissions, even while acting within their role for the LLC.

Illinois, through its legislative branches, recently amended the Limited Liability Company Act (805 ILCS 180) through Senate Bill 1495.  Part of the bill was to overrule interpretations of specified portions of the LLC Act set forth in Dass v. Yale, 2013 IL App (1st) 122520, specifically concerning Section 10-10, related to the liability of members and managers. 

Dass v. Yale was the result of an action filed against both an LLC and an individual related to property damage.  One issue presented to the Appellate Court was whether Section 10-10 of the LLC ACT exempts LLC members or managers from personal liability for torts or fraud committed in their capacity as members or manages of the LLC.  The Court in Dass answered this question in the affirmative, reasoning:

In the case at bar, the plain language of section 10-10 states that, ‘[e]xcept as otherwise provided in subsection (d) of this Section, the debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the company. A member or manager is not personally liable for a debt, obligation, or liability of the company solely by reason of being or acting as a member or manager.’ 805 ILCS 180/10-10(a) (West 2010). Thus, ‘[s]ection 10-10 clearly indicates that a member or manager of an LLC is not personally liable for debts the company incurs unless each of the provisions in subsection (d) is met.’ Puleo, 368 Ill. App. 3d at 68. Here, there is no claim that [the manager] is liable under subsection (d), so [the manager] is not personally liable for the tort claim against [the LLC].

Dass, 2013 IL App. (1st) 122520 at ¶39.

The interpretation in Dass permitted individuals acting within their role for an LLC to escape individual liability for tortious conduct.  In Dass, the tortious conduct alleged was fraudulent misrepresentations by the Manager of the LLC.  The Manager was able to avoid individual liability.  The trial court concluded that the language of the Act protected the Manager “since all of the allegations of the complaint occurred while he was acting solely in his capacity as a manager of [the LLC].”  The appellate court agreed with the trial courts interpretation.

Senate Bill 1495 corrected the interpretation made in Dass, thus restoring personal liability for tortious acts of an individual, even if acting in his or her capacity as a manager or member of a LLC.  Sec. 10-10(a-5) now provides:

Nothing in subsection (a) or subsection (d) limits the personal liability of a member or manager imposed under law other than this Act, including, but not limited to, agency, contract, and tort law. The purpose of this subsection (a-5) is to overrule the interpretation of subsections (a) and (d) set forth in Dass v. Yale, 2013 IL App (1st) 122520, and Carollo v. Irwin, 2011 IL App (1st) 102765, and clarify that under existing law a member or manager of a limited liability company may be liable under law other than this Act for its own wrongful acts or omissions, even when acting or purporting to act on behalf of a limited liability company. This subsection is therefore intended to be applicable to actions with respect to which all timely appeals have not exhausted before the effective date of this amendatory Act of the 101st General Assembly as well as to all actions commenced on or after the effective date of this amendatory Act of the 101st General Assembly.

805 ILCS 180/10-10(a-5).

What does this mean for individuals operating an LLC?  You should be aware that you will remain liable for your individual actions, even if acting on behalf of the LLC. 

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between The Law Office Of Christian Blume, LLC or Christian Blume and the user or browser.

How to avoid listing your home address when operating a home based business in Illinois

By: Christian Blume – Illinois Business & Real Estate Attorney

Many individuals starting a home-based business may be concerned with listing their home address on public records, for any number of reasons.  A recent amendment to the Illinois Assumed Business Name Act, HB2528 carves out an exception for certain businesses to avoid listing their personal residence when personal safety is an issue.

The Assumed Business Name Act (805 ILCS 405) requires any person or persons transacting business under an assumed name (other than their real names) to file a certificate setting for the assumed business name in the county clerk of the county in which business is transacted.  The types of businesses that are required to register assumed business names include, sole proprietorships, general partnerships, and professional services corporations.  It does not require corporations, limited liability companies (LLC), or limited liability partnerships (LLP) to register their assumed name.

An assumed business name is any name other than that of the individual owner(s) of the business.  Example: Abraham Lincoln, P.C. would not need to register as an assumed name, but Lincoln Law would since it is not the actual name of the individual transacting the business as a professional corporation. 

In August 2019, the Assumed Business Name Act was amended, to add 805 ILCS 405/1a, effective January 1, 2020.  The amendment permits a person or persons transacting business under an assumed name at his or her personal residence, to list the county clerk as the default agent for service if listing their home address would put their safety at risk.  Certain conditions must be met in order to list the county clerk.  

  • The person reasonably believe that publishing his or her home address would put his or her safety at risk, and lists the reasons for that belief on a form submitted to county clerk, which shall be kept confidential;
  • The form is accompanied by a court order or police report;
  • The person provides the address of his or her residence to the county clerk, which shall be kept confidential.

The amendment further stipulates that the county clerk has a duty to notify the business of service of process on behalf of the business, and may charge a nominal fee for this service.  Therefore, effectuating service on an individual or individuals operating under an assumed name can be accomplished through the county clerk, like serving any other registered agent.  Whether the individual(s) receive(s) actual notice from the county clerk would not matter for purposes of jurisdiction, although this hasn’t been tested.

Lastly, the act does not list what the court order or police report must state in order, and leaves this question open for interpretation.  Must the police report or court order confirm there is a reasonable risk of safety for listing the home address?  

Additional Resource: Cook County Application to Register or Amend an Assumed Business Name

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem.  The information in this article is current as of the date indicated, and may not be updated to reflect future changes/developments.  Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between the Law Office Of Christian Blume, LLC or Christian Blume and the user or browser.

Free Donuts for Life!

 

The other day, while finishing off my coffee a donut and a couple donut holes with jimmies (look that one up) at one of the local donut shops near my office, I overheard the donut shop worker talking with a bike messenger about a bird stuck in the donut shop. 

My initial thought…this sounds like a job for a tall guy, like changing light bulbs, pulling down projector screens, or reaching objects from high places, reminiscent of my high school teachers’ requests.  I know makes tall people feel special. 

So I inquired to ask what was going on.  The worker said they were closed, while she was attempting to get the bird out from above the door, with a donut on a stick and with the bike messenger’s assistance.  Yeah that’s right, a donut on end of a stick, as if the bird was only there for a snack, maybe it was.  I offered to grab the distressed bird and the worker looked at me with confusion.   

In attempt to sweep the bird down, it flew across the store and eventually ended up landing in an empty donut box before flying to hide behind some coffee cups.  I asked the worker if I could go behind the counter to get the bird out, while she consented.  Through multiple attempts and without harming the little bird, I was able to trap it using two plastic coffee cups.  I took it outside, a few yards from the door, and released it.  It flew away unscathed.

Here’s where it gets interesting, after thanks, the woman working the store proclaimed “free donuts for life” and told me to come in the following day, when they were re-opened.  Wrong person to offer free donuts for life to, especially the good donuts (you know what I mean if you live in Chicago and appreciate donuts).

So am I to expect free donuts for life?  Does the shop owe me free donuts for life?  Short answer is probably not.   

This promise of “free donuts for life” can be looked at through contract law (i.e. whether we have an enforceable contract), specifically under Illinois contract law.  A contract requires mutual assent, by the parties to the terms of the agreement; the parties here being the donut business (assuming the worker had authority to bind the donut shop, without getting into agency law) and myself.  Mutual assent requires a “meeting of the minds” and typically includes an offer and acceptance.  Both parties must understand and accept the agreement they are entering into.  In addition to mutual assent there must be “consideration”, which is a bargained-for promise, act, or forbearance or the creation, modification, or destruction of a legal relation.

However, past consideration is not sufficient consideration to form an agreement, and would be treated as a gratuitous promise.  Which means since I had already provided the removal of the bird from the donut shop (performance and past consideration), the shop’s promise of “free donuts for life” was based on a prior conferred benefit, and not sufficient to form consideration for the promise.  Had the worker stated “if you get that bird out of here, you will get free donuts for life”, or “whoever gets the bird out of here gets free donuts for life” and I performed, this would satisfy the consideration element of a contract, but not the case here.    

I asked a lawyer friend to discuss and although willing to take my case for a third of the donuts, we both concluded that there was no exchange of consideration, “free donuts for life” for past performance was not enough.  But he did bring up the legal doctrine of promissory estoppel, based on the gratuitous promise of the donut shop. 

 “The restatement of contracts defines promissory estoppel as “A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.”     

Illinois requires the following elements to set out a claim for promissory estoppel: (1) there is a promise that is unambiguous in its terms; (2) there is reliance by the party to whom the promise is made; (3) the reliance is expected and foreseeable by the party making the promise; and (4) the party to whom the promise is made relies on the promise to his or her detriment.   These are all factual questions that must be established, and will hinge on the specifics of each case.

Applying these elements to the bird rescue and “free donuts for life”, one could argue the promise was ambiguous.  What does “free donuts for life” mean? A donut a day or a dozen?  It’s not clear, what the shop was promising, and what the promissee (myself) may be interepreting the promise to be, and this creates ambiguity.   However, a jury or judge may be able to determine what “free donuts for life” means, and give it more definite meaning.

Second, I would have had to rely on this promise, and in Illinois that reliance must be reasonable.  Let’s say I did rely on this promise and showed up every day to ask for a donut and let’s assume this was reasonable, that would satisfy the second element. 

The third element also requires reasonableness, and it would have to be reasonable for the donut shop worker to expect and foresee me rely on this promise; again for a judge or jury to decide.     

The fourth element, detrimental reliance, may be shown through my efforts in showing up at the donut shop day after day to receive my free donut, but it would be unreasonable for me to continue to show up, if after the first day I was told I only get one free donut and cannot continue to come back for free donuts.   

Let’s say I overcome these hurdles and prevail on a claim under the doctrine of promissory estoppel, what could I recover in damages?  Some courts have awarded actual damages (i.e. the detriment of the reliance) others have awarded the promise, “free donuts for life,” so long as necessary for equity to prevail. 

Free Donuts for Life.

*Although I am a consumer of delicious donuts, I am also a business and real estate lawyer and would be happy to speak with you and see how I can be of assistance with your start-up or small business.   Christian@attorneyblume.com

Chicago Code Violations: How to Navigate the Administrative Hearing Process

Chicago Municipal Code Violations often times carry a potential fine. Know the process, know your rights!

Much like the federal government or state governments, local municipalities in Illinois are permitted to enact and enforce laws. In Chicago these laws are codified in the Chicago Municipal Code, and prescribe: building codes, business licensing, taxing authority, and many more.

While many of these laws are related to “public health, safety, welfare, morals and quality of life of the residents of the City of Chicago”, a violation may result in costly fines. Furthermore, as in the case of building code violations, or violations relating to the care of property, if those fines go unpaid, they may result in a lien against the real property.

For example, the current fine for not cutting or controlling weeds to the required length (§ 7-28-120) can range from $600 to $1,200. Each day the violation exists is a separate offense, which means that the fine can be multiplied by the number of days, and could potentially grow to an even larger amount, much like rapidly growing lawn weeds.

Does the City of Chicago always seek the maximum fine permitted by law? No, but the City could-and would-be within its legal right to do so.

Let’s say you have a neighbor that notices out of control weeds growing on your front lawn, and that person decides to report this alleged violation by dialing 311. The Department of Streets and Sanitation can send out an inspector to make a determination if a violation exists. If there is an alleged violation observed, the violation can be referred to the the City’s Corporation Counsel to prosecute and enforce the Chicago Municipal Code.

The prosecution of the ordinance violation(s), in many cases, is filed at the Chicago Department of Administrative Hearings (DOAH), a ‘quasi-judicial body’, and heard before an Administrative Law Judge (ALJ). ALJs are licensed attorneys, contracted to hear Administrative cases; they are not elected judges.

The rules for prosecuting Administrative Law cases are not as stringent as those in Circuit Court or Federal Court. One difference is that the City need not obtain personal jurisdiction over the individual or business being sued. In most civil cases, personal jurisdiction can be obtained through service of process, whereby the Sheriff or a special process server physically delivers a copy of the summons and complaint to the individual or entity being sued. When the City prosecutes an ordinance violation through the DOAH, it can serve the notice of the violation and hearing by regular mail.

On the date of the hearing, you (or your attorney) will likely file your appearance a-one-page form with your case information and contact info. Typically you (or your attorney) will meet with the Assistant Corporation Counsel (City Attorney), that will be prosecuting your case. During this meeting the City may request that you agree to an order to be entered on that day. Critically, you do not have to agree to the order being requested by the City and you have the right to be represented by your own lawyer at this meeting.

Depending on the nature of the case and what the City is seeking, your first hearing may be the last, and the case may conclude on that date. However, in instances where corrective action is sought, such as building code violations, there may be a return date, or dates, to ensure that the corrective action was taken. The case is called by the ALJ, and if an agreement was reached with the City Attorney, the ALJ will likely enter that order. If no agreement is reached, a hearing will likely be conducted by the ALJ, in which both the City and you will have the opportunity to present evidence, and argue the case. The ALJ will ultimately make a determination as to whether a violation existed and enter a judgement. If the judgment is not entered in your favor, you will have an opportunity to appeal that decision to the Circuit Court, but there are time constraints and specific requirements for filing an appeal.

What happens if you miss the notice by mail, and do not attend the hearing? Likely a default judgment will be entered against you, and the notice of the default judgment will be mailed. Does that mean you have to pay that amount? Not necessarily, you (or your attorney) can file a motion to set-aside the judgment, but there is a time limit to file this motion, in order for it to be considered timely.

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between the Law Office Of Christian Blume, LLC or Christian Blume and the user or browser.

Selling Homemade Food in Illinois: legal considerations.

When I was an Attorney with the City of Chicago, I spent a considerable amount of time doing work at police stations. Some of my fondest memories were made working with Chicago Police Officers. Every so often a retired police officer would make his rounds selling delicious homemade cupcakes.  I will leave his name and company name out of this article, but if you are a south side police officer you may know who I’m talking about. We’ll call him the Cupcake Guy.

The Cupcake Guy would roll into the station with his travel cooler, and the Officers and workers would flock to him to buy an individually packaged cupcake.  These were some of the most moist and delicious cupcakes you could get, and at a very reasonable price.

He likely made these cupcakes in his home.  While not altogether a new concept, homemade goods have been around for much longer than I will even try to determine.  However, the laws that regulate homemade goods, for commercial sale, particularly in Illinois are relatively new, or recently updated.    

There are two statutes this article to focus on relating to home-made food, for commercial use: (1) Home Kitchen Operation (410 ILCS 625/3.6) and (2) Cottage Food Operation (410 ILCS 625/4).

Home Kitchen Operation (410 ILCS 625/3.6)

The Home Kitchen Operation law regulates the production of baked goods in a person’s residence for direct sale to consumers.  Specifically, to fall under the Home Kitchen Operation Statute: (1) monthly gross sales cannot exceed $1,000, (2) the food is a non-potentially hazardous baked good, (3) notice must be given to consumers that the food was produced in a home kitchen, and (4) a label must be affixed to the food package containing the name of the food, and allergen information.  Additionally, the food must be stored in the residence, in which it was produced. In 2018, changes to the statute modified the definition of “baked goods.”   

In order for the law to take effect in your municipality, township, or county, the local government must adopt an ordinance, authorizing home kitchen operations.  

Cottage Food Operation (410 ILCS 625/4):   

Unlike a Home Kitchen Operation, a Cottage Food Operation is not restricted to “baked goods,” but includes all foods other than those specifically banned in the statute, with exceptions.  A Cottage Food Operation permits the sale of home made food to the public, but limits the sale to farmers’ markets, or sold on the farm, where the main agricultural ingredient is grown or delivered directly to the consumer.  

There are several types of foods and ingredients that are banned from being produced by a Cottage Food Operation, unless properly licensed, certified, and compliant to sell these banned foods.  This list includes: meats, certain types of pies (pumpkin, sweet potato, custard, creme), cheese cakes, garlic in oil, and many canned foods.  Additional requirements include: proper labeling, registration with the local government, a food sanitation management certificate, and the placement of a placard with the following notice  “This product was produced in a home kitchen not subject to public health inspection that may also process common food allergens.” Local governments and the Department of Public Health may prescribe further requirements on cottage food operations, so it is important to check with your local municipality.

*Starting a small-business, running a closely held business or facing legal issues in Illinois? Contact Blume Law.

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between the Law Office Of Christian Blume, LLC and the user or browser.

Don’t pierce the corporate veil: 11 mistakes to avoid for small-business owners

Christian Blume -December 21, 2018

Many business owners and entrepreneurs have likely heard the term ‘piercing the corporate veil’, but don’t understand the meaning, and how to take steps to avoid the ‘piercing.’

Generally, when we talk about piercing the corporate veil, it is holding shareholders (in the case of a corporation), directors, officers or employees liable for the debt of a corporation.  These owners can be individuals or even parent corporations/LLCs. Why might a creditor want to go after the individuals or another corporate entity? The entity may not have the resources to cover the liability, and the creditor is seeking money from someone with ‘deeper pockets.’

Piercing the corporate veil is considered an equitable remedy and a means to impose liability from an underlying claim, such as a breach of contract. To pierce the corporate veil, Illinois courts require a creditor demonstrate: (1) a unity of interest and ownership, such that the separate personalities of the corporation and the individual do not exist; and (2) circumstances must exist such that adherence to the fiction of a separate corporate existence would sanction a fraud, promote injustice, or promote inequitable consequences.

In Fontana v. TLD Builders, the Illinois 2nd District Appellate Court delineated the following (11) factors, ‘badges of fraud’, to determine whether the unity of interest and ownership has been met, and are insightful as to whether the second-element of the two prong test is met. Corporations should do their best to avoid these mistake.

inadequate capitalization: when the corporation’s ratio of capital to its obligations and business operations is too low.

failure to issue stock: corporations have the power to issue shares of stock, as per the articles of incorporation. However, a failure to issue those authorized shares demonstrates a unity of ownership and may support a piercing of the corporate veil.

failure to observe corporate formalities: not holding regular director and shareholder meetings, keeping minutes at corporate meetings, maintaining corporate records, or updating filings with the secretary of state.

non-payment of dividends: not all corporations pay dividends, and many don’t necessarily have to. However, if dividend payments are required or appropriate based on the circumstances, then they should be paid to the shareholders.

insolvency of the debtor corporation: if the corporation is regularly unable to satisfy its debts when becoming due.

non-functioning of the other officers or directors: if only one of the named officers or directors, when there are multiple listed officers or directors, exercises complete control over the corporation, this demonstrates that the corporation may be in-effect the alter-ego of that individual and not a distinct entity.

absence of corporate records: corporations are required to keep correct and complete books and records, and minutes of the proceedings of its shareholders and directors. Additionally, a record of a corporation’s shareholders must be kept, including the names and addresses, and the number of shares and class of shares held by each shareholder.

commingling of funds: when personal funds are used to pay corporate liabilities, corporate funds are used to pay personal expenses, or when one corporate entity pays the liabilities of another. This can be avoided by maintaining separate and distinct bank accounts for the business entity, and not using one account to pay for the liability of another. This practice may also help in maintaining accurate accounting.

diversion of assets from the corporation by or to a stockholder or other person or entity to the detriment of creditors: when the corporation transfers assets or money, to shareholders or third-parties to prevent creditors from collecting. Additionally, these transfers may violate Illinois Uniform Fraudulent Transfer Act (740 ILCS 160).

failure to maintain arm’s-length relationships among related entities: when lawyers use the term “arm’s-length relationship”, it is typically in reference to a more formal relationship, where each party is independent, well informed, and looking out for their own interest. The opposite would be an “arm-in-arm relationship,” one in which the parties are more intimate, closely related, or familial. An example of this would be a corporation leasing office space/commercial space from another closely held entity below market rent and without any formal leases, or without periodic rental payments.

whether, in fact, the corporation is a mere facade for the operation of the dominant stockholders: when the corporation is set-up as a ‘sham’ or ‘dummy’ corporation. While it is good practice to avoid as many of these mistakes as possible, there is no concrete formula that courts use to determine whether to pierce the corporate veil, and each is determined based on the particular facts.