[gamblor956]

the issue is that the auditing and even getting access to those records in court is extremely expensive.

In most cases, the bankruptcy trustee will be doing that work already.

But in a case like this, it's probably not going to be necessary. Courts usually pierce the corporate veil in situations involving the debts of wholly-owned subsidiaries. It happens frequently enough that its actually news when they don't pierce the veil. This is because corporations usually do a bad job of doing all the things that are necessary to maintain the liability shield in court.

In a nutshell: it requires treating the subsidiary as an entirely separate entity, with separate books, accounts, back office, officers/management, etc. As this is extremely inefficient, most corporations don't bother. The only corporations that do are the ones that deal with company-killing litigation regularly enough that it's worth it to absorb the cost of maintaining the liability shield.