Askew View Corporation was forced into bankruptcy by its creditors. The stock of the corporation was held exclusively by Steven Keith and his 12 year old son. Askew View Corp. was incorporated primarily for the purpose of limiting liability of Keith, who is engaged in the distribution of movies and music electronically via the Internet. Askew View Corporations initial capitalization proved inadequate in light of unexpected business losses. Keith owns 98% of the shares of Askew View. Keith has informally withdrawn his monthly salary from the corporate income and has also used such income to pay his child support obligation and build his collection of Maserati sports cars.
What elements do the creditors of the Askew View corporation need to show to be successful in their attempt to "pierce the corporate veil" and recover from Keith personally for alleged corporate debts? Why?
Your response should be at least 200 words in length. All sources used
When creditors pierce the corporate veil, it is generally because there has been an intermingling of corporate funds with personal funds. In this case, it has already been proven that the initial capitalization was inadequate in relation to expected business losses. Also, it would be taken into consideration by a court that the corporation is held by Keith in the amount of 98%, while he is drawing a salary high enough to afford luxury sports ...
This solution discusses the various elements that creditors of Askew View Corporation need to show in order to be successful in their attempts to pierce the corporate veil. A thorough discussion is presented.