Piercing The Corporate Veil Now Reaches Non Shareholders And Non Officers

The Illinois Appellate Court has just ruled for the first time that when a corporation’s “veil” is pierced, a person who is not a shareholder or officer of the corporation may be held liable for its debts.  “Piercing the corporate veil” is a practice employed by parties injured by corporations, when the assets of the corporation are insufficient to cover the damages suffered by such parties.   Corporations are legally separate entities from the people who own or operate them, but courts have the power to “pierce” corporations, and reach the assets of the people behind them, if doing so would prevent an unjust or inequitable outcome.  In the recent case, the court ruled that when a non-shareholder or  non-officer of a corporation controls its operations and obtain its profits, such a person can potentially be subject to the piercing of that corporation’s  veil.  This precedential ruling potentially provides both new risks for certain corporate non-shareholders and non-officers, and new recovery opportunities for parties injured financially, physically, or otherwise by corporations.