Question 1

Dianne has been using a corporation that she has established to hide her money from her personal creditors. She has been secretly intermingling her and the company's finances and transferring assets out of her home and into the company's business and under its name. If she is sued by one of her creditors, the courts may:

Pierce the Corporate Veil

Apply the Business Judgment Rule

Place Dianne in Chapter 7 Bankruptcy

Apply the Duty of Loyalty

Question 2

Jim has been sued for fraudulently transferring a series of valuable paintings he had to his corporation in order to avoid his creditors taking the assets as part of his repaying debts he owes them. The court, in response to the suit, has determined it is appropriate for them to pierce the corporate veil. What does this mean for Jim?

He is going to jail

He loses his job as director

He no longer has the corporation's liability protections

He has exceeded the scope of the business judgment rule and may be held personally liable