On September 24, 2026, the First Department issued a decision in Matter of UBS Sec. LLC v. Dondero, 2026 NY Slip Op. 05460, recognizing, but not deciding, the question of veil piercing in limited partnerships, explaining:
Notwithstanding the foregoing, we conclude that UBS’s alter ego claim against Dondero relating to HFP and CDO Fund must be dismissed for failure to state a cause of action. The allegations in the turnover petition regarding that claim are cast in terms of piercing the corporate veils of HFP and CDO Fund. Yet those entities are not corporations; rather, they are limited partnerships. Whether a veil-piercing claim directed at a limited partnership is cognizable under New York law, the identity of the elements and contours of any such claim, and whether UBS can muster sufficient allegations to plead any such claim are not properly before us. We therefore dismiss the corporate veil piercing/alter ego claim as against Dondero predicated on the obligations of limited partnerships HFP and CDO Fund. UBS is afforded leave to replead those aspects of the veil-piercing claim, should it choose to do so.
(Internal citations omitted), The court added in a footnote:
The parties’ briefs recognize that HFP and CDO are limited partnerships, and make some modest arguments regarding whether, under New York law, corporate veil piercing principles apply to limited partnerships. We note that those arguments do not address the relevance (if any) of the place-of-formation of the limited partnerships (for HFP, Delaware, and for CDO Fund, Bermuda). Because the allegations in the turnover petition regarding the alter ego claim against Dondero relating to HFP and CDO Fund are cast in terms of piercing corporate veils, and in light of our concern for the informed, orderly development of the law, we decline at this juncture to consider the issue of whether, under New York law, a veil piercing claim lies against the limited partnerships HFP and CDO.