Novel Question Disfavors Veil Piercing
One of the creditors of a now-defunct corporation sought to pierce the company’s corporate veil and recover from the shareholders of the corporate entity controlled by a receiver. Acting through a series of corporations and finance companies, the shareholders came to possess millions of dollars of the defunct company’s debt. The lower court concluded the claims should have been brought by a receiver that had been appointed in the lawsuit the shareholders had filed against the defunct company. In that suit, the receiver had sold the company's assets and repaid some of its creditors. On appeal the Minnesota Supreme Court took up the question of first impression, whether a receiver may bring a piercing-the-corporate-veil claim against the shareholders of the corporate entity that the receiver controls in receivership. The Minnesota high court found the receiver did not have the power to bring veil-piercing claims, and consequently, the claims against the shareholders do not represent an impermissible collateral attack on the receivership and are not barred by res judicata.