NSAV Holding Inc (NSAV)

[Major Profits]

Fascinating.

Yes, they can sue Net Savings Link, Inc. but it is insolvent and will remain insolvent since James isn't doing business via the subsidiary anymore. So can NSAV Holding, Inc. be held liable for the Net Savings,Link, Inc.'s debt??

Dunno and can't figure it out either!! But that is why people sue and go to court!

https://www.invigorlaw.com/when-can-a-subsidiary-create-liability-for-a-parent-entity/

Imagine you went out of your way to create a corporate structure that would minimize risk. You divided up your corporate assets into different subsidiary entities so that they could not all be reached by a single creditor. Now, one of your subsidiaries is being sued, your parent entity has also been named in the lawsuit, and you’re wondering to what extent the parent entity’s assets–including its ownership of all the other subsidiaries–are at risk.

The Basic Rule–Parent Corporation not Liable for Acts of Subsidiaries

The basic rule is that parent corporations will not be liable for acts of their subsidiaries. This default rule is the reason so many conglomerates are structured as a hierarchy of parent and subsidiary corporations. The Supreme Court of the United States emphasized this basic rule in United States v Best Foods:

“It is a general principle of corporate law deeply ingrained in our economic and legal systems that a parent corporation (so-called because of control through ownership of another corporation’s stock) is not liable for the acts of its subsidiaries.”

Exceptions to the Basic Rule–“Piercing the Corporate Veil”

Washington Corporate Law
A parent corporation may be liable for its subsidiaries’ obligations when state law supports “piercing the corporate veil”–a legal term of art that means disregarding the liability protection afforded by a limited liability entity such as a corporation or limited liability company. To pierce the corporate veil and find a parent corporation liable for a subsidiary’s debts, the plaintiff suing the parent entity must show that there is an overt intention by the corporation to disregard the corporate entity in order to avoid a duty owed to that plaintiff.

What does it mean to “disregard the corporate entity in order to avoid a duty?” This is where the Washington case law gets a little fuzzy. Generally, the entities have to be some part of a fraud. What exactly constitutes a fraud in this context is not entirely clear. One general definition of fraud is “wrongful deception intended to result in financial gain.”

While more recent cases trend toward defining fraud in this parent-subsidiary liability context more narrowly, older cases in Washington that haven’t been directly overruled embrace principles like:

“A corporation may not be used as a cloak or disguise to escape corporate liability, and corporate veil may be pierced when necessary to do justice in particular cases.”

So, I guess, did James do this to avoid paying debt and, thus, "screwed" Net Savings Link, Inc. note holders who are owed money? (Fraud?)

Er, maybe. But darned if I know. But one thing is certain. If they get sued that'll bring on some new attorney fees. And NEW debt.

JMOs