Hinman, Wester Discuss Reverse Corporate Veil PiercingPDF
North Carolina Lawyers Weekly covered a recent case out of the U.S. Court of Appeals for the Fourth Circuit that centered around reverse corporate veil piercing. Reverse veil piercing occurs when a "court holds a corporation liable for a judgment against an owner." The pivotal question of the case was whether Delaware law would allow reverse piercing when an LLC serves as an alter ego of its sole member.
Robinson Bradshaw attorney Travis Hinman, who clerked on the 4th Circuit before joining the firm, weighed in on whether the court should or could have consulted the Delaware Supreme Court. She noted that the 4th Circuit "typically only punts to a state court when it is 'either really unsure about how the question will turn out or very concerned about the implications of the decision.'"
Firm attorney John Wester also shared his thoughts on support for reverse piercing.
"If the court did not recognize reverse piercing here, what is to prevent a fraudulent member of an LLC from hiding assets in plain sight?" Wester said. "If that had no consequences there can be no valid protection for creditors and others who depend on the integrity of separate enterprises."
To read the full article, "Corporate veil pierced in reverse," please visit NCLW.