Large commercial lender

ALTER EGO ANALYSIS – EXPERT TESTIMONY

A Fortune 500 Company brought suit against a Subcontractor for breach of contract for failure to complete a multi-million-dollar agreement. Through discovery, the Company learned the Subcontractor had several affiliated companies that appeared to operate as a single business with comingled operations. The Subcontractor had transferred funds to the affiliated entities leaving the Subcontractor insolvent. At a prior firm, an HMP executive was engaged to issue an expert report regarding the characteristics of alter ego that were evident at the Subcontractor.

Issues:

  • Although there were numerous management agreements between the Subcontractor’s affiliated entities, the terms were not enforced and money freely moved among the parties
  • Current audited financial statements for the Subcontractor were not available and the creditability of the internal books and records was questionable

Approach:

  • Analyzed the movement of funds from the Subcontractor to the affiliated entities
  • Reviewed publicaly available information regarding the formation and ownership structure of the Subcontractor and affiliated entities
  • Assisted Counsel with the depositions of the CFO and bookkeeper by providing certain questions that commonly indicate alter ego. Their deposition answers were used in our analysis and report
  • Prepared an expert report

Results:

  • Favorable settlement of the case before trial which remains confidential
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