How to Prevent Piercing the Corporate Veil
Courts have frequently permitted creditors to impose liability on a parent organization for actions of a subsidiary when "fairness" requires the disregard of separate entities.
Even where nonprofits have restructured to create separate entities to protect their assets from zeppelin-sized liabilities, they must assure that the separation is respected. They must conduct their activities so that courts and creditors will not be able to "pierce the corporate veil" and impose liability on a parent or affiliated entity within a system.
The full text of this article is available to paid subscribers only. Login or subscribe to read more