## Facts

- Ozark Restaurant Equipment Co., Inc. operated a restaurant-equipment business in Springdale, Arkansas.
- In September 1980, Bruce Anderson and Elmer Dale (Ed) Yancey purchased Ozark, each becoming a 50% shareholder and director; Yancey also served as an officer.
- Kenneth Eads served as a director and president; Robert Whiteley was a consultant involved in Ozark’s finances; Anderson-related entities did business with Ozark.
- After financial failure, Ozark filed Chapter 7 on August 24, 1982.
- In October 1982, the Chapter 7 trustee filed consolidated adversary proceedings, including an action seeking to pierce Ozark’s corporate veil and hold insiders personally liable “on behalf of all” creditors for Ozark’s debts.
- The bankruptcy court pierced the veil and imposed joint and several liability on certain insiders for $136,653 in unsecured debt.
- The district court reversed, holding the trustee lacked standing to assert an alter-ego/veil-piercing claim on behalf of creditors.

## Issues

1. Whether a Chapter 7 trustee has standing to assert, on behalf of the debtor’s creditors, a state-law alter-ego/veil-piercing claim against the debtor corporation’s principals.

## Decision

- The Eighth Circuit affirmed the district court.
- The court held the Chapter 7 trustee lacked standing to pursue an alter-ego/veil-piercing action asserted on behalf of creditors.
- The trustee’s attempt to aggregate creditor veil-piercing claims did not create an estate cause of action.
- The alter-ego action was dismissed for lack of standing, leaving such claims to individual creditors.

## Legal Principles

- A Chapter 7 trustee generally may assert only (i) causes of action belonging to the debtor as of the petition date and thus included in the estate under 11 U.S.C. § 541, and (ii) specific statutory avoidance actions granted by the Bankruptcy Code.
- Property of the estate under § 541 includes the debtor’s legal or equitable interests, including the debtor’s own causes of action, but excludes independent claims belonging solely to creditors.
- State-law veil-piercing/alter-ego is typically a remedy allowing a creditor to impose personal liability on shareholders or insiders for corporate debts when the corporate form has been misused; absent state law making such a claim the corporation’s own, it is not an estate claim.
- Courts distinguish injuries to the corporation (estate claims the trustee may pursue) from injuries solely to creditors (creditor claims outside the trustee’s standing).
- Bankruptcy distribution goals do not expand the trustee’s authority beyond statutory limits on estate property and standing.

## Conclusion

The court held that a Chapter 7 trustee cannot sue corporate principals on a collective veil-piercing theory asserted for creditors because such alter-ego claims are creditor claims, not property of the estate under § 541, unless state law assigns the claim to the corporation itself.


In re Ozark Restaurant Equip. Co., 816 F.2d 1222 (8th Cir. 1987)