Brown v. Knowles

[BUSINESS LAW]

In Brown v. Knowles,[1] the supreme court held that an employee’s veil-piercing claim is not barred during the corporation’s bankruptcy proceedings.[2] Brown, the sole shareholder of International Steel, entered into an agreement with Knowles, an employee, for a bonus compensation package but eventually stopped paying.[3] Knowles subsequently filed suit against International Steel and Brown in the lower court one day before International Steel filed for Chapter 11 bankruptcy protection.[4] In the lower court, Knowles received a monetary award.[5] On appeal, Brown argued that Knowles’ veil-piercing claim was barred by International Steel’s bankruptcy proceedings.[6] The supreme court affirmed the lower court’s decision, reasoning that International Steel, and not Brown, was the debtor in the bankruptcy proceedings.[7] Thus, according to the court, since the veil-piercing claim was against Brown and not the corporation, Brown was not entitled to bankruptcy protection since he never filed for bankruptcy.[8] Affirming the lower court’s decision, the supreme court held that an employee’s veil-piercing claim is not barred during the corporation’s bankruptcy proceedings.[9]

 


[1] 307 P.3d 915 (Alaska 2013).

[2] Id. at 919–20.

[3] Id. at 920–21.

[4] Id. at 921.

[5] Id. at 921–23.

[6] Id. at 927–28.

[7] Id.

[8] Id. at 928.

[9] Id. at 919–20.

Brown v. Knowles

[BUSINESS LAW]

In Brown v. Knowles,[1] the supreme court held that an employee’s veil-piercing claim is not barred during the corporation’s bankruptcy proceedings.[2] Brown, the sole shareholder of International Steel, entered into an agreement with Knowles, an employee, for a bonus compensation package but eventually stopped paying.[3] Knowles subsequently filed suit against International Steel and Brown in the lower court one day before International Steel filed for Chapter 11 bankruptcy protection.[4] In the lower court, Knowles received a monetary award.[5] On appeal, Brown argued that Knowles’ veil-piercing claim was barred by International Steel’s bankruptcy proceedings.[6] The supreme court affirmed the lower court’s decision, reasoning that International Steel, and not Brown, was the debtor in the bankruptcy proceedings.[7] Thus, according to the court, since the veil-piercing claim was against Brown and not the corporation, Brown was not entitled to bankruptcy protection since he never filed for bankruptcy.[8] Affirming the lower court’s decision, the supreme court held that an employee’s veil-piercing claim is not barred during the corporation’s bankruptcy proceedings.[9]

 


[1] 307 P.3d 915 (Alaska 2013).

[2] Id. at 919–20.

[3] Id. at 920–21.

[4] Id. at 921.

[5] Id. at 921–23.

[6] Id. at 927–28.

[7] Id.

[8] Id. at 928.

[9] Id. at 919–20.