If the company ends up having no commercial success and the lawsuits for damages rack up, can they just close the company file for bankruptcy and face no consequences? Or is there some civil or criminal risk to this behaviour?
But anyone that personally causes damage through negligence or intentional acts can be sued personally as well. If the employer is bankrupt the employees involved would be the only ones pursued. And these damages are relatively small individually, bankruptcy is not an issue.
Also there are some exceptions to the limited liability for company owners or directors like for illegal activity and fraud.
Since the Airbnb bookings were ostensibly made by individuals, most attorneys would also name those individuals (in addition to the company if the company was named).
Having your founders/management/employees rent houses via Airbnb is a really bad strategy for limiting your liability using a company.
If the company's owners had unlimited liability for problems the company caused, that wouldn't be much of an LLC, would it? The primary purpose of an LLC is to make it so that the owners (often the founders) cannot personally be held responsible for debts the company incurs, even debts incurred through their instructions.
This also includes debts caused by punishment for the company breaking civil contracts, but doesn't make individuals who use the company to break the law immune to criminal charges. But the standard of evidence for prosecuting that type of malfeasance is pretty high...
It’s more so investors who aren’t involved in day-to-day decision making can invest without worrying that the founders will create liability for them.
You can "in certain circumstances" (negligence, overt criminality...) go after the managers. You probably can't go after the managers for things like producing a business plan they could have plausibly believed was legal and causing the company to incur civil liability.
In the situation described in this article, probably both the owners and the managers (likely the same people!) get away without being held accountable, and the victims have no recompense because the company folds.
Insufficient capitalization is the #1 reason for piercing the veil (and also works well against corporations). This involves not putting enough investment into a company to pay the foreseeable debts it would incur from its activities. This means: if your LLC incurs debts knowing it lacks the ability to pay them off, the courts can pierce the LLC and go after you.
https://en.wikipedia.org/wiki/Piercing_the_corporate_veil
If this were happening in the real world, they would have to personally back some of the corporate debts before banks would lend them money. But this is Silicon Valley, where banks and VCs just give away money to their buddies.