[jacquesm]

My exposure to this is limited to cases in Europe and ones that I was a direct witness to and in all those cases it was pretty clear that the company was created with the express purpose to commit bankruptcy fraud and the result was the owner of those companies lost his shirt. All other attempts to pierce the corporate veil that I've seen failed.

[jessaustin]

Presumably that fraud involved assets that belonged to the corporation (or were represented to creditors as such) being transferred outside the corporation to other entities controlled by the owner? That will pierce. Imagine instead someone who builds a store in a location with insufficient commercial traffic and whose corporation fails for that reason alone: her creditors can't take away her house, her retirement account, or some unrelated business.

[jacquesm]

Long story short: guy figured out a way to make money: create an LLC, rent some warehouse space, order hardware, sell hardware, pay invoices, order some more hardware, sell hardware, pay invoices. This cycle repeats a couple of times with higher and higher order values and then finally when the orders are really large (millions) holds a clearance sale, pockets the money and defaults on the invoice. Boom, company bankrupt.

He did this several times before the corporate veil was pierced and they took him for all he had.

The other case was one that is probably best described as mismanagement ('onbehoorlijk bestuur') where the CEO/sole shareholder of a company started using the corporate account as though it was his personal account. When the company was unable to meet payroll taxes the taxman seized his private assets after piercing the veil.

[jessaustin]

Both of these episodes are clear cases of commingling. "Pockets the money" and "as though it was his personal account" are key phrases that would command any forensic accountant's full attention. Without these or something like them there would be no justification for piercing.

[jacquesm]

Excellent, thank you for pointing out the exact reasons why that happened. It made good sense from my perspective but to know the exact bits that would flag it is useful information.