Can a trustee of a bankrupt corporation maintain an action against a defendant based on an alter ego theory?

California, United States of America


The following excerpt is from Shaoxing County Huayue Import & Export v. Bhaumik, 11 Cal. Daily Op. Serv. 672, 120 Cal.Rptr.3d 303, 191 Cal.App.4th 1189, 2011 Daily Journal D.A.R. 80 (Cal. App. 2011):

The trustee of a bankrupt corporation can maintain an action against a defendant based on an alter ego theory if there is some allegation of injury to *1199 the corporation that gives the corporation a right of action against the defendant. ( Stodd v. Goldberger (1977) 73 Cal.App.3d 827, 833, 141 Cal.Rptr. 67 ( Stodd ).) For example, the trustee of a bankrupt corporation can maintain an action against corporate shareholders on an alter ego theory in order to recover property or pursue a right of action belonging to the bankrupt corporation, including an action to set aside fraudulent transfers or an action for conversion to recover assets of the bankrupt corporation. ( Id. at p. 834, 141 Cal.Rptr. 67) However, the trustee of a bankrupt corporation "cannot maintain an action against defendants on an alter ego theory absent some allegation of injury to the corporation giving rise to a right of action in it against defendants. In the absence of any such allegation, the asserted cause of action belongs to each creditor individually[.]" ( Id. at p. 833, 141 Cal.Rptr. 67.) "[A] trustee in bankruptcy may not enforce rights of action which belong to the creditors individually[,] because they are not rights in which the bankrupt claims an interest and are not assets of the estate in bankruptcy. [Citations.]" ( Id. at p. 835, 141 Cal.Rptr. 67.)

Other Questions


In a personal injury action brought by a former wife against her ex-partner in a civil action, in addition to a similar action against the husband in a separate action, can the court order return to husband in the civil action? (California, United States of America)
Is a claim for damages brought by defendant in a personal injury action brought by plaintiff against defendant in the Superior Court of Appeal against Defendant in a civil case? (California, United States of America)
How have defendants defended their actions in a civil action brought by a plaintiff who alleges they failed to properly raise the railing to comply with the current code requirements? (California, United States of America)
Is a trustee entitled to reimbursement of legal fees in maintaining or defending an action? (California, United States of America)
Does Section 1268.710 of the California Constitution allow a defendant in an eminent domain action to recover costs incurred in defending the action? (California, United States of America)
Does a voluntary dismissal of an action result in a judgment in the absence of a defendant as to whom the action was dismissed? (California, United States of America)
Does a voluntary dismissal of an action result in a judgment in the absence of a defendant as to whom the action was dismissed? (California, United States of America)
In a wrongful attachment action for damages for economic loss sustained as a result of wrongful attachment, what are the costs incurred in defending the underlying action? (California, United States of America)
How have the trustees of a trust been found to have breached their fiduciary duties toward the trust by failing to disclose to the trustee that the trustees have a conflict of interest in the trust? (California, United States of America)
Does Defendant have a valid claim to be able to claim damages from a defendant who has been found guilty of a similar claim against the Defendant? (California, United States of America)
X



Alexi white


"The most advanced legal research software ever built."

Trusted by top litigators from across North America.