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Kristoph incorporated Hi-Energy, Inc., which was a weight-loss program consisting of food products, diet pills, group meetings, and exercise classes. Hi-Energy, Inc. was a closely held corporation, and Kristoph was the sole shareholder, the only member of the Board of Directors, and the only corporate officer. Hi-Energy, Inc. charged $2,400 for a six-month program. Kristoph frequently diverted Hi-Energy, Inc.’s revenue to his own personal checking account, rather than the corporation’s bank account. Kristoph used the money to pay for his personal living expenses, including his rent, groceries, and utilities. Even though state law required single-shareholder owned corporations to hold regular meetings, Kristoph did not think that he had to do this, so he did not hold meetings, keep minutes, or maintain the corporate records. Mary was a customer of Hi-Energy, Inc. She sustained a serious back injury during an exercise session at Hi-Energy, Inc., and she believed her injury was attributable to the negligence of the exercise instructor who worked for Hi-Energy, Inc. She sued Hi-Energy, Inc. During discovery, Mary learned that Hi-Energy, Inc. had very few assets. In fact, it had debts that far exceeded its assets. She sought to pierce the corporate veil by naming Kristoph, in his personal capacity, on the complaint. Will Mary be successful in piercing the corporate veil? Why or why not?

Operation Management, Management Studies

  • Category:- Operation Management
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