Asset-Poor Debtor · Composite scenario · illustrative
Asset-Poor Business Judgment Against a Defunct Entity
A $180K judgment against a corporate entity that has effectively wound down. Underwriting focuses on alter-ego potential against the principal.
Underwriting Thought Process
- • The named defendant has no recoverable assets.
- • All recovery value depends on adding the principal under alter ego or fraudulent transfer theories.
- • Investigation cost is justified only if the facts support an amendable judgment.
File Facts
- Amount
- $180,000
- Entity
- Defunct; no operations; no bank activity
- Principal
- Active in successor entity; transfers between entities flagged
- Documentation
- Complete; underlying ledger preserved
Outcome
Investigation surfaced commingling and transfers. Motion to add principal as judgment debtor under alter ego succeeded; recovery from successor entity within 24 months.
Takeaways
- • Defunct-entity judgments are not automatically dead.
- • Alter ego is fact-intensive — facts must be assembled before pleading.
- • Fraudulent transfer timing rules are strict; move quickly.