The Indiana Southern District Federal Court affirmed the bankruptcy court’s judgment in favor of KGR Client (the plaintiff trust), ruling that the trust can pierce the corporate veil to hold the sole shareholder personally liable to the trust, a prior minority shareholder. This is a case of first impression on piercing the veil of a corporation where the original $7.5 Million judgment was based on a dissenters’ rights determination of value for a squeeze out merger eliminating the minority shareholder’s ownership. The oppressed minority shareholder established that fraudulent conduct occurred both before and after the state court valuation petition date. The pre-valuation petition misconduct provided the basis for value enhancement damages in the state court’s determination of value; however, the post-valuation petition misconduct provided the basis for piercing the corporate veil. For a thorough discussion of these issues, or if you have other questions regarding your minority shareholders rights, please contact David Wright, Kevin Koons, and Justin Leverton or one of our other attorneys here to discuss your situation. It would be our pleasure to assist you.
Small Business Ownership – Opportunities and Challenges