July 28, 2021

Volume XI, Number 209

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July 26, 2021

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Slights Sees No Dualism In Corporate Form

Professor Stephen Bainbridge and several others have taken note of Vice Chancellor Slights' recent consideration of "reverse veil piercing" in Manichaean Capital v. Excela Technologies, Inc., 2021 Del. Ch. LEXIS 100.  Surprisingly, the question of outsider reverse veil piercing has not been previously addressed in Delaware.   Vice Chancellor Slights' answer:

After carefully reviewing the justifications for and against the adoption of reverse veil-piercing, I find that this equitable remedy (or right) is an appropriate means, in limited circumstances, to remedy fraud and injustice.

A California Court of Appeal previously addressed the question of whether reverse veil piercing could be applied to a Delaware limited liability company.  Curci Investments, LLC v. Baldwin, 14 Cal. App. 5th 214, 221 Cal. Rptr. 3d 847 (2017).  See California Court Green Lights Reverse Veil Piercing Of Delaware LLC.  

Both cases involved outsider reverse veil piercing which allows a third party outsider is able to reach corporate assets to satisfy claims against an individual shareholder.   Insider reverse veil piercing involves an attempt by a shareholder or member to disregard the corporate or LLC entity.  See Inside And Outside Reverse Veil Piercing.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 148
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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