Connecticut Adopts Reverse Veil Piercing
A judgment creditor who obtained a foreign judgment against his former business partner, sued that partner, limited liability companies and corporations purportedly controlled by him as well as the mortgagee of a residential property transferred from the former partner to one of the LLCs, challenging the enforceability of a mortgage obtained by the LLC, xalleging fraudulent transfers under the Connecticut Uniform Fraudulent Transfer Act (CUFTA) regarding the mortgaged property and a commercial property sold by another one of the LLCs after it had been transferred to the LLC from the former partner. The suit also sought to employ reverse veil piercing in order to reach the assets of the LLCs and corporations. Following consolidated appeals, the Connecticut Supreme held the plaintiff, a stranger to the mortgage, lacked standing to challenge the enforceability of that mortgage. It also affirmed the trial court’s determination that the property transfers constituted fraudulent transfers under CUFTA. Most importantly it determined the doctrine of outsider reverse piercing of the corporate veil is a viable remedy in Connecticut.