Case Study: Defeating the “Corporate Veil” Attack

The Challenge

Eric had spent decades building a successful family manufacturing business with a global client base. However, his success attracted a fraudulent attack: an unscrupulous client in a foreign jurisdiction manufactured a complaint and sued Eric’s company in a local overseas court.

Due to poor representation by local counsel, Eric’s company lost the case. The creditor then moved to enforce this foreign judgment in Eric’s home court. When the company’s assets were insufficient to pay the judgment, the creditor attempted to “pierce the corporate veil”, arguing that Eric should be personally liable for his company’s debts.

The Southpac Strategy

Southpac helped Eric establish an Offshore Asset Protection Trust before the domestic enforcement actions finalized. This transferred the legal title of his personal wealth to the Trustee, separating it from his personal liability.

When the domestic court issued an order commanding Eric to direct the Trustee to pay the judgment, the protective mechanisms of the trust were triggered:

• Anti-Duress Provisions: The Trustee refused the request, citing the trust’s “Anti-Duress” clause. This provision forbids the Trustee from acting on instructions given by a Settlor who is under legal duress (i.e., a court order).

• Impossibility of Performance: Because the Trustee is a foreign entity not subject to the domestic court’s jurisdiction, the court could not enforce the order.

The Result

The creditor could not seize the assets locally, and the statute of limitations for bringing a fraudulent transfer claim in the Cook Islands had expired (typically 1-2 years).

With no standing to sue the Trustee and no ability to enforce the judgment against Eric personally, the creditor’s pursuit collapsed. Eric’s personal estate remained intact, unaffected by the corporate litigation.