Alter Ego And Veil Piercing

Alter_Ego Remedies CdAlterEgoAndVeilPiercing

The legal concept of alter ego means as it sounds: A and B are really one-and-the-same in the eyes of the law. A is really B, and B is really A, and to treat them separately would be to sanction an injustice.

Where alter ego is found between a person and an entity (or a fiduciary relationship such as a trust), the court may allow the liability against the entity to pass through to the person. This is known as veil piercing. When the liability goes in the other direction and passes through the person to the entity, this is known as reverse veil piercing -- although many courts have dispensed with the distinction between "straight" and "reverse" veil piercing and simply treat the concept as different sides of the same alter ego coin.

In other words, veil piercing is the court's cutting through of a liability shield, and alter ego is the legal concept upon which that cutting is based. In practice, this all tends to get rolled up into a single analysis and action by the court.

Alter ego and veil piercing provide an extremely useful tool to creditors, particular in cutting through asset protection structures where the debtor has transferred away the title to assets but still retains control of them.

Alter Ego Topics And Opinions

Court Opinions

Butler America, LLC v. Aviation Assurance Co., 55 Cal.App.5th 136, 269 Cal.Rptr.3d 284 (2020)