Sears Holdings Corp. (fka SHLDQ)

[Emptyhead]

The Insolvency Act of 1986 permits the court to lift the corporate "veil" (legal protection of shareholders from liability) if it can be proven that a parent company actively participated in the management of the subsidiary, effectively acting as a "shadow director" of the subsidiary. By piercing the veil, the subsidiary may be deemed an extension of the parent company, because the board and management of the subsidiary, failed to maintain independence from the parent. This subjects the subsidiary's assets to inclusion in any legal settlement ordered by the court. Outside of this, the Parent Co.'s shares of the Subsidiary can be auctioned off to meet the debt liabilities of the Parent in BK.