Reverse Piercing of the Corporate Veil: A Straightforward Path to Justice

Authors

Nicholas B. Allen

Document Type

Note

Abstract

(Excerpt)

This Note argues that while outside reverse piercing should not be the norm, there are instances when application of the doctrine is the only way to ensure justice. Because of the competing interests that reverse piercing implicates, this Note proposes that the doctrine be permitted against both legal and equitable owners, but only when traditional, less intrusive remedies are insufficient. Additionally, any innocent shareholders should be permitted a capital exemption prior to payment of the plaintiffs claim when that claim would liquidate the corporation's assets. Finally, dilemmas amongst creditors should be dealt with under preexisting priority laws. Part I discusses both traditional and outside reverse veil piercing. Part II discusses the arguments for and against the various methods of outside reverse piercing through a case law analysis. Finally, Part III advances a solution that safeguards the interests of all involved parties by first identifying the shortcomings of more traditional remedies and then proposing a new approach.