Midland Interiors, Inc. v. Burleigh, et al. (Del. Ch., December 19, 2006), read opinion here. This is one of the few cases where the Chancery Court has pierced the corporate veil to find the shareholder of the corporation responsible for the corporate debt. The threshold in Delaware to reach that result is very high. A review of the detailed egregious facts supports this rare relief which is very difficult to obtain in Delaware. The factual basis includes a finding by the court of, inter alia, fraud, as well as failure to follow corporate formalities and failure to pay the annual franchise tax, among other abuses by the defendant who was the sole stockholder, sole director, sole officer and sole employee. The court made the sole stockholder responsible for the judgment that was obtained previously against the corporation. See generally, Stephen M. Bainbridge, Abolishing LLC Veil Piercing, 2005 U. Ill. L. Rev. 77, 77 (2005)(Piercing the veil is a “seriously flawed doctrine,” “one of the most befuddled [areas of the law],” and is beset by “uncertainty and lack of predictability); Franklin A. Gevurtz, Piercing Piercing: An Attempt to Lift the Veil of Confusion Surrounding the Doctrine of Piercing the Corporate Veil, 76 Or. L. Rev. 853, 853 (1997). A prior decision in the case was posted here.
UPDATE: Prof. Chiappinelli has a more detailed commentary on the case here.
ASIDE: My schedule for the next few days is quite hectic, so the several case summaries I have to post will need to wait until I take care of my paying clients.