The case involves the Lady May, a Cayman Islands-registered yacht worth tens of millions of dollars officially owned by HK International Funds Investments (USA) Limited LLC, whose only member is Mei Guo, daughter of self-declared multi-billionaire Ho Wan Kwok. HK has no revenue, bank accounts, officers, directors or employees, maintains no records other than those related to the Lady May, and "ha[s] no business purpose other than owning the Lady May" and a smaller vessel, according to court documents. Kwok filed for bankruptcy in February 2022, listing only a few thousand dollars in assets and a Pomeranian as his property—but not the yacht.
Circuit Judge Richard Sullivan wrote that Delaware law recognizes outsider reverse veil-piercing claims and that bankruptcy trustees can pursue such general claims under Section 544(a) of the Bankruptcy Code because they "increas[e] the basket of assets that could be used to satisfy any and all liabilities owed by the debtor." The court found several traditional veil-piercing factors supported treating HK as Kwok's alter ego: the company was insolvent and undercapitalized, failed to observe corporate formalities, and served as "a façade" for Kwok, who primarily used the yacht and controlled the entity despite his daughter's nominal ownership.
The dispute began in 2020 when creditor Pacific Alliance Asia Opportunity Fund LP sought to enforce a $116 million judgment by levying on the Lady May. After the yacht sailed to the Bahamas despite a New York court restraining order, the state court held Kwok in contempt, finding his daughter's testimony "internally inconsistent and dissembling" and concluding Kwok controlled the yacht. A Chapter 11 trustee was later appointed to oversee Kwok's bankruptcy estate and filed counterclaims asserting HK was Kwok's alter ego.
The ruling strengthens trustees' ability to recover assets hidden through shell companies and family members in bankruptcy proceedings. Guo and HK had argued that trustees lack standing to bring reverse veil-piercing claims and that genuine factual disputes precluded summary judgment. The decision eliminates roughly $40 million in assets from Kwok's creditor-shielding structure, including the yacht and $37 million in escrow funds.