Deep Rock Doctrine Law and Legal Definition

The Deep Rock Doctrine was developed by the US Supreme court in Taylor v. Standard Gas & Electric Co., 306 U.S. 307 (U.S. 1939) . It stands for the principle that where a parent corporation has not only dominated but has mismanaged a subsidiary corporation, which is presently in bankruptcy or reorganization, and where the parent corporation has a claim which is due to the mismanagement, a court may refuse to permit the parent to assert the claim as a creditor except in subordination to the claims of the subsidiary's other creditors and preferred stockholders. This principle, which has become known as the Deep Rock doctrine, is equitable in nature.