Corporate lawParent-Sub piercing

Last updated 26 Apr 07

Latin American Law

Today’s topics

• Parent-sub piercing– Labor rights (pension)

• Pension rights = constitutional rights• Presumption parent caused bankruptcy• Ownership carries financial responsibility• Secondary liability

– Writ of protection• Preliminary injunction (irreparable harm)• Implicit factual finding of parent responsibility• Constitutional Court judgment

– Non parties– Order money payments

• Res judicata and stare decisis

• Model for borrowing

• Gain perspective

• Discover truths

• Impose / power

Value of knowing other legal systems

Investment environment …

Pension paymentsas constitutional rights …

Compañía de Inversiones de la Flota Mercante

Fiduciaria Petrolera

(receiver)

Federación Nacional de Cafeteros

What are issues? 772

pensioners(641 > age 60)

(363 > age 70)

Tutela

(writ of protection)

80%owner

Fondo Nacional del Café

other pensioners

other creditors

Colombia Labor Law (1995)

Article 148: The parent or controlling corporation shall be secondarily liable for the obligations of its subsidiary, it it causes the latter’s bankruptcy … by exercising control for its own benefit and against the interests of the bankrupt corporation.

What is presumption?Could Coffee Federation rebut?

CERCLA (“Superfund”)

Sec. 9607. Notwithstanding any other provision or rule of law … (1) the owner and operator of a … facility … shall be liable for— (A) all costs of removal or remedial action (B) any other necessary costs of response (C) damages for injury to, destruction of, or loss of natural resources .…

Is parent corporation liable?

Constitutional Court(wow) …

pierce first and ask questions later …

Superior CourtLabor Chamber

(Bogota)

ColombianCourt

System

Superior Court Labor Chamber

(Cartagena)

Municipal Civil Court

(47th 48th Bogota)

Labor

Court(2nd Cartagena)

Municipal Civil Court

(Bucaramanga)

Supreme Cassation Court

Labor Chamber

Constitutional Court

inter partes inter comunis

Res judicata

Stare decisis

Other constituency statutes …

Law 6404 (Brazil)Art 116. The dominant shareholder shall use it poser to enable the company to fulfill its social obligations … to other shareholders, employees, community …Art 154. Administrators shall exercise the powers … to achieve the company’s goals, provided that they satisfy the demands of the public good and uphold the enterprise’s social obligations.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Pennsylvania Consolidated Statutes § 1715(a) . The board of directors … of a business corporation may, in considering the best interests of the corporation, consider to the extent they deem appropriate:(1) The effects of any action upon any or all groups affected by such action, including shareholders, employees, suppliers, customers and creditors of the corporation, and upon communities in which offices or other establishments of the corporation are located.

End