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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Quizplus · Accepted Answer

A court will "pierce the corporate veil" only under specific circumstances, such as when the entity is used to commit fraud or when the separation between the entity and its owners is not maintained, not simply because the entity was created to limit liability.

If a Business Entity Is Created to Insulate Its Owners