Company employees were illegally dismissed and the Labor Court awarded them compensation. The National Labor Court also pierced the corporate veil between the company and a newly incorporated sister company that in effect tsook over the employees, customers and reputation and continued the company's operations from the same factory, emptying the first company.
The High Court of Justice rejected a petition and held that a company is indeed a separate legal entity, but it is possible to pierce the corporate veil when it is usurped. Piercing the veil in the case of debts to employees will be easier because an employee is not a 'voluntary creditor' but a special kind of creditor to whom the company owes increased duty of care and special fiduciary duty. The piercing of the veil between companies in the same group and their perception as a single economic-business entity will be in the case of establishing of a business that continues the activity of the company while emptying its assets or when several companies have been established without economic rationale to separate them, but the rationale of the owners' desire to avoid repayment of debts to creditors.