Corporate Veil Piercing as Purdue Seeks Refuge in Chapter 11; Conservative Economist Tyler Cowen Arg
As Purdue seeks refuge in chapter 11, a conservative economist articulates a point I’ve also been discussing in various contexts: prepare for material reductions in or a complete end to “respect” for corporate veils. In a September 19, 2019 blog post, Mr. Cowen framed the topic around social media, famous corporate leaders and societal pressures. The expanded version of the argument was published on Bloomberg on September 16, 2019.
My framing focuses on the prevalence of holding companies with pooled capital and cash, relatively minimal insurance, and growing numbers of “mass torts” involving widely distributed products that create large financial problems for governments already facing deficits. Another factor arises from SCOTUS’ decisions on “foreign claims” and in personam jurisdiction. The lines drawn by SCOTUS may have pleased some short term thinkers, but they are forcing plaintiff’s firms to create global litigation structures, and are forcing them to take discovery on and acquire detailed knowledge of relationships between and actions of various entities and executives involved in national and international corporate families. Meanwhile, the financial community is ramping up litigation funding for claims around the globe, and logically prefers to invest when acquired knowledge can be reused in thousands of claims for very large amounts of money.