CORPORATIONS -PARENT AND SUBSIDIARY-RIGHT OF PARENT OR SUBSIDIARY TO SHARE WITH OTHER CREDITORS IN ASSETS OF ASSOCIATED CORPORATION ON THE LATTER'S INSOLVENCY

Authors

Collins E. Brooks, University of Michigan Law SchoolFollow

Abstract

Increasingly in the past few years, courts throughout the country have seemed willing to disregard what Professor Ballantine has called the "basic theory of corporation law," the concept that a corporation is an entity entirely distinct and separate from its stockholders. It is not the purpose of this writer to take issue with this tendency; for the most part the decisions seem sound and the results just. It is believed, however, that the rules used by the courts in reaching those decisions are, in many instances, open to question. There is one situation in particular in which the courts have "pierced the veil" of corporate entity, that would seem to merit more cautious progress than some courts have seen fit to pursue. That is the case where parent and subsidiary corporations are closely interrelated and, on the insolvency of one, the other seeks to share in the assets of the insolvent, on the basis of advancements made prior to the insolvency.

Recommended Citation

Collins E. Brooks, CORPORATIONS -PARENT AND SUBSIDIARY-RIGHT OF PARENT OR SUBSIDIARY TO SHARE WITH OTHER CREDITORS IN ASSETS OF ASSOCIATED CORPORATION ON THE LATTER'S INSOLVENCY, 37 Mich. L. Rev. 440 (1939).
Available at: https://repository.law.umich.edu/mlr/vol37/iss3/6