Alter Ego

In general, corporations shield their shareholders from personal liability for the acts and debts of the corporate personality.  However, when the corporation is treated informally as a mere extension of its shareholders, and inequities would result if the shareholders were able to use that shield, the corporation may be regarded as the shareholders' "alter ego," resulting in personal liability for corporate debts.  Whether you are seeking to pierce the corporate veil to extend personal liability to a corporation’s shareholders, or defending claims directed at corporate shareholders, Stephens Friedland LLP’s lawyers have significant relevant experience. 

Select Experience:

  • Our client was sued as an alter ego by a large financial institution seeking to pierce the “corporate veil” and collect from our client on a $700,000 corporate guarantee provided to one of the other shareholders of the corporation.  After extensive discovery, we moved for summary judgment on the “inequitable result” prong of alter ego liability.  We won.  The case against our client was summarily dismissed and, eventually, we recovered a six-digit attorneys’ fee award plus substantial interest. 
  • Our client was sued on an alter ego theory based upon a commercial transaction.  We marshaled all of the evidence necessary to show that there was no “unity of interest” between the corporation and our client.  The plaintiff voluntarily dismissed the case based on the merits of our client’s defense.
  • Our client entered into a contract which contained an arbitration clause.  The other party was an insolvent entity.  With the arbitration pending, we filed a declaratory-relief action in civil court to hold the parent corporation liable for any award against the subsidiary.  Rather than litigating the issue of alter ego, the parent corporation voluntarily subjected itself to arbitration.
  • Prosecuted alter-ego claims against controlling shareholders of corporate debtor.
  • Defended parent corporation against alter-ego and successor liability claims on real estate debt incurred by subsidiary corporation.
  • Defended franchisor against debts incurred by franchisee.