Bankruptcy: Creditor’s Alter Ego Action Against Debtor’s Parent Corporation Was Deemed Property of Debtor’s Estate to Which the Automatic Stay Applied: S.I. Acquisition, Inc. v. Eastway Delivery Service, Inc. (In re S.I. Acquisition)
Summerford, Leslie M.
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Examines the 1987 Fifth Circuit decision in S.I. Acquisition, Inc. v. Eastway Delivery Service, Inc., in which the court held that a creditor’s alter ego action against a bankrupt debtor’s nonbankrupt parent corporation was the property of the debtor’s estate, and thus protected by an automatic stay. In the author’s estimation, this decision leaves no recourse to creditors in like positions against parent corporations who elect to use the corporate form of a subsidiary as a method of escaping liability on debts incurred by its subsidiary on the parent’s behalf.