A creditor of a company discovered that the sole shareholder of the company incorporated a new business to which he transferred all assets and activities of the company.
The Court accepted the claim and held that the corporate veil will be ignored when the corporate identity is usurped in order to promote an illegal goal. Here, the shareholder used the separate legal entity of the company in a manner that would deceive and deprive its creditors when transferred the company's activity and business inventory to the new business he established in order to avoid paying debts and thus the shareholder will be liable for the debts of the company both under the doctrine of piercing of the corporate veil and under personal liability for his actions to empty the company.