Only Generalized Alter Ego Claims Are Property of the Bankruptcy Estate

Our trustee clients as well as our creditor clients should keep in mind that alter ego claims are only property of the bankruptcy estate if there is a generalized injury to the debtor corporation and all of its creditors. See, In re Advanced Packaging & Prods. Co., 426 B.R. 806, 818-819 (C.D. Cal. 2010). “Under California law, a corporation in bankruptcy may pierce its own veil to seek recovery for its creditors if equity so demands.” Id. at 818. If, however, the injury is a particularized injury to a particular creditor and no other claimant or creditor has an interest in the cause, the claim does not become property of the bankruptcy estate. Id. at 819.