An employee of an urban sports association that ceased to operate demanded to receive her pay from another association that currently operates similar activities.
The Court dismissed the claim. The piercing the corporate veil doctrine allows a company's debt to be attributed to shareholders in certain circumstance also applies to associations. One of the cases where piercing the corporate veil may be applied is the establishment of an association instead of another that was closed, in order to avoid payments to creditors. However, here, the new association was formed prior to the closing of the previous association, and despite the fact that it is currently engaged in similar activities, it was not set up to evade creditors and is therefore not liable for the debts of the association in which the employee worked.
Published in Afik News 292 25.09.2019