What is “piercing the corporate veil” or the “alter ego” theory?
In some cases, courts have allowed plaintiffs to pursue the assets of the corporation’s owners to satisfy a judgment against the corporation. This defeats the personal liability protection that owners inherently benefit from when the corporation has maintained its legal requirements. Some instances whereby the courts may allow the plaintiff to pierce the defendant’s corporate veil include, fraud or intermingling of an owner’s and corporate funds, failure to maintain corporate legal requirements, practices where the corporation can be no longer viewed as a separate entity but is rather serving as the owner’s “alter ego,” and in some instances, undercapitalization. Sometimes, courts will allow plaintiffs to receive compensation from corporate officers, directors, or shareholders for damages rather than limiting recovery to corporate resources. This procedure avoids the usual corporate immunity for organizational wrongdoing, and may be imposed in a variety of situations. The specific crit
