It is not crazy and not rare. I can sue you right now, personally, and you would need to pay someone to defend you in court.

If you've never owned a business and have no relation to me, then probably you'll survive the suit just fine.

But as you can see, OP had a business relationship with the person involved, and though OP probably won the suit in the end, he still had to pay oodles of money to protect himself. And if he lost, well, then there's my point.

The note did not have personal guarantees. But that didn't stop him from trying to claim alter ego. Like the sibling comment says, even if we win, we still need to pay tons of money to lawyers just to deal with it, and put in a lot of our time as well.

Our lawyers and other investors do think this situation is pretty rare, as the guy ended up killing the business that could have given him a better return on his money, and also screwed everyone else involved in the process.