In C.F. Trust v. First Flight Limited Partnership, what is required for reverse veil piercing to be recognized in Virginia?

• A. Unity of interest and ownership and use of the entity to evade personal obligations or commit fraud
• B. Explicit agreement to disregard the entity
• C. The entity must fail to maintain separate financial records
• D. The owner must personally guarantee the entity's debts

Answer: (A)

In Virginia, reverse veil piercing hinges on two elements: unity of interest and ownership between the entity and its owner, and the use of the entity to evade personal obligations or to commit fraud. When the parent and subsidiary are so interrelated that they operate as one, and the entity is used as a vehicle to dodge debts or to perpetrate fraud, Virginia allows reaching the parent’s or owner’s assets to satisfy the subsidiary’s obligations. That combination—a blurred boundary between the entities plus improper use—drives the recognition of reverse veil piercing.

This explains why the correct answer is that both unity of interest and ownership and misuse to evade obligations or commit fraud are required. It isn’t about an explicit agreement to disregard the entity, nor is it enough to show only that financial records aren’t kept separately. Nor does it require a personal guarantee from the owner.