Blog

Only Generalized Alter Ego Claims Are Property of the Bankruptcy Estate

| Sep 30, 2016 | Uncategorized |

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.

FindLaw Network