Two partnerships appeal the bankruptcy court’s entry of a default judgment which determined that they were the alter ego of the Debtor and which ordered the assets of the partnerships to be included in the bankruptcy estate. We affirm.1
BACKGROUND
John R. Burwell filed a Chapter 7 petition on October 4, 2006, and on January 12, 2007, the Trustee filed a complaint against Burwell, Burwell Family Limited Partnership (“BFLP”), Albert Kelly, Jr., and RHFP, LLC. On June 5, 2007, the Trustee filed an amended complaint. Counts I, II, and III are most relevant to this appeal because they related to the Trustee’s contention that the two partnerships should be treated as the alter egos of Burwell himself. Count I sought a declaratory judgment that Burwell utilized the partnerships to defraud his creditors, and that honoring the corporate entities of the partnerships would “result in injustice to Debtor’s creditors and would be fundamentally unfair.” Count II sought relief pursuant to 11 U.S.C. § 105 enjoining the defendants from interfering with assets of the estate, including those owned by the partnerships. Count III sought turnover of the assets of the partnerships, based on their being property of the Debtor’s estate. Burwell answered the complaint, and Kelly filed a motion to dismiss. The partnerships did not respond to the Complaint.
On August 8, 2007, the Trustee filed a motion for default judgment against the two partnerships. The Notice of Hearing and Motion for Default Judgment stated that if a responsive pleading was not filed by August 17, the court may grant the motion without a hearing. Neither partnership defendant responded to the motion. Default judgment was entered on August 22.
Burwell, a non-lawyer purporting to act on behalf of the two partnerships, timely appealed the default judgment. An administrative panel of the BAP refused to permit him to prosecute the appeal without counsel appearing on behalf of the partnerships. Thereafter, an attorney entered an appearance. The partnerships have not requested a stay pending appeal, and the Trustee is apparently liquidating some partnership property. On December 17, *8332007, the Trustee dismissed the complaint against Burwell and Kelly, making the default judgment a final order for purposes of appeal.
On May 2, 2008, the B.A.P. sent a letter regarding oral argument, giving the parties until May 12 to respond. The Trustee waived oral argument; the appellants did not respond. The matter has, therefore, been submitted on the record and briefs, without oral argument.
THE COMPLAINT
According to the language of the Complaint, which was incorporated into the trial court’s Findings of Fact, Conclusions of Law and Order for Judgment, Burwell formed BFLP several years prior to filing the bankruptcy petition and then transferred his interest in the partnership to Kelly. Burwell testified that Kelly is the sole owner of RHFP, LLC.
After a state court judgment was entered against him and collection efforts had begun, Burwell used both the BFLP and RHFP bank accounts to manage his personal financial affairs and to protect his assets from creditors.
About the same time that he sold his interest in BFLP to Kelly, in May 2008, Burwell sold real estate in Stillwater, Minnesota, to Katherine Norton. As part of that transaction, Burwell retained an option to purchase five acres of that land for $1.00. He commenced an action against her on August 26, 2005, seeking to enforce the option. During the pendency of that action, he purportedly transferred the five-acre option to BFLP in exchange for tobacco rights which BFLP owned. Burwell sold the tobacco rights in January 2006 and deposited the $64,600 in proceeds into RHFP’s bank account. He withdrew the tobacco proceeds from the RHFP account and deposited them into the BFLP account in February 2006. He then withdrew the tobacco proceeds from the BFLP account in increments of $9,900 so as not to trigger federal reporting requirements. (There were at least five of those withdrawals in the four-day period between February 3 and 7, 2006.) The tobacco proceeds and other BFLP funds were used for Burwell’s personal affairs. Burwell candidly testified at the § 341 meeting that he was using the partnership accounts to manage his personal affairs so that the judgment creditor couldn’t get the money. The judgment creditor had garnished his personal accounts twice before, and he “didn’t want that to happen again.” He was also depositing his social security checks into the BFLP account.
As to the RHFP account, Burwell was not a signatory. Kelly was. However, Burwell had a rubber stamp of Kelly’s signature. Burwell wrote all the checks on that account and stamped Kelly’s name.
On the day the petition was filed, the RHFP account had a balance of $2,300, and a check for $9,000 was deposited into it the day after the petition was filed. The Complaint asserted that, based on the records, it appeared that more than $225,000 was deposited into and taken out of the RHFP account in the year prior to the bankruptcy.
THE JUDGMENT
The Order for Judgment states that Burwell “controlled each RHFP and BFLP and he is the beneficial owner of assets held in their names and they are his alter egos. The assets of each are therefore, and should be considered to be assets of this bankruptcy estate.”
In addition to the alter ego claims' for relief, the Complaint asserted that the Debtor had listed a $25,000 diamond ring and a $4,000 BMW on his schedules and that he purportedly granted a security in*834terest in the ring and car to BFLP but neither lien was perfected. These liens were the subject of Counts VI through IX. The judgment avoided them.
APPELLANTS’ POSITION
The appellants are not arguing improper service or any other procedural defects. Rather, appellants argue that the court erred in holding that the partnerships were the alter ego of Burwell and all of the assets of the partnerships were included in Burwell’s bankruptcy estate. The appellants’ brief contains assertions of fact to support their position. However, none of the “facts” now being presented are part of the record in the trial court. Accordingly, the trial court did not have an opportunity to consider them.
STANDARD OF REVIEW
We review the entry of a default judgment for an abuse of discretion. Jones Truck Lines, Inc. v. Foster’s Truck & Equip. Sales, Inc. (In re Jones Truck Lines, Inc.), 63 F.3d 685, 686-87 (8th Cir.1995); Am. Gen. Fin. v. Washington (In re Washington), 248 B.R. 565, 566 (8th Cir. BAP 2000).
DISCUSSION
Default judgments under Federal Rule of Bankruptcy Procedure 7055 and Federal Rule of Civil Procedure 55 are disfavored. United States ex rel. Time Equip. Rental & Sales, Inc. v. Harre, 983 F.2d 128, 130 (8th Cir.1993). Because of that, courts have an independent duty to determine the sufficiency of the complaint. Fed.R.Civ.P. 55(b)(2); Miller v. Kasden (In re Kasden), 209 B.R. 236, 239 (8th Cir. BAP 1997). A default judgment must be entered upon facts clearly pleaded or otherwise established tending to prove the trustee is entitled to the relief granted. Id.
A party is not entitled to a default judgment as of right; rather, the decision calls for the court’s exercise of sound judicial discretion. Lovell v. McArthur (In re McArthur), 258 B.R. 741, 746 (Bankr.W.D.Ark.2001) (citing Jones Truck Lines, Inc., 63 F.3d at 686 and Howell Enter. Inc. v. First Nat’l Bank (In re Howell Enter., Inc.), 99 B.R. 413, 415 (Bankr.E.D.Ark.1989)). A hearing on the merits is favored by the policies underlying the Federal Rules of Civil Procedure. McArthur, 258 B.R. at 746. When the grant of a default judgment precludes consideration of the merits of a case, even a slight abuse of discretion may justify reversal. Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 785 (8th Cir.1998) (decided in the context of a Rule 55(c) motion to set aside a default judgment).
This court addressed in great detail the necessary underpinnings of a default judgment in the Kasden case, in which the bankruptcy trustee attempted to get the debtor to remove his personal property from real estate the trustee wanted to sell. The debtor did not oblige, so the trustee removed it and put it into storage. He notified the debtor that if the debtor did not identify and claim whatever personal property he wanted, the trustee would sell it. The debtor evidently objected to the threat to sell the items, but did not identify or claim them to the trustee’s satisfaction. The trustee then filed an adversary complaint requesting a court ruling that the items did in fact belong to the debtor and the debtor should pay the costs of their removal and storage. The debtor was properly served, but failed to answer or appear. On the trustee’s motion, the court entered a default judgment in favor of the trustee, essentially repeating in the judgment’s factual findings the allegations of the complaint. The debtor appealed.
*835The B.A.P. laid out the requirements for the sufficiency of a default judgment:
The granting of a default judgment for failure to defend, as is the situation now before the court, is appropriate where the failure to comply with the time requirements is more than a marginal failure and where the nonresponding party’s conduct includes “willful violations of court rules, contumacious conduct, or intentional delay.” Harre, 983 F.2d at 130. See also Ackra Direct Marketing Corp. v. Fingerhut Carp., 86 F.Sd 852, 855 (8th Cir.1996). However, a default judgment may not be entered on a complaint that fails to support the claim for relief and on appeal, a defaulted defendant may always challenge the legal sufficiency of the complaint allegations. Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir.1988).
Upon entry of a default judgment, facts alleged to establish liability are binding upon the defaulting party, and those matters may not be re-litigated on appeal. However, it follows from this that facts which are not established by the pleadings of the prevailing party, or claims which are not well-pleaded, are not binding and cannot support the judgment. On appeal the defendant, although he may not challenge the sufficiency of the evidence, is entitled to contest the sufficiency of the complaint and its allegations to support the judgment.
Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir.1978).
Kasden, 209 B.R. at 238-39. The court then found that the complaint failed to state facts to support a judgment in favor of the trustee. The court remanded the case to the bankruptcy court for further findings.
The Eighth Circuit Court of Appeals dismissed the trustee’s appeal of the remand order, holding that it was not a final, appealable order. However, the Eighth Circuit court noted that the debtor’s statements in the pleadings, particularly his letter objecting to the trustee’s decision to sell the personal property, may have been sufficient to support the bankruptcy court’s entry of the default judgment. Nevertheless, the bankruptcy court did not cite the letter in its judgment, and the court of appeals said “the bankruptcy court’s findings echoed [the trustee’s] complaint, and the B.A.P. concluded the complaint was legally insufficient to support the default judgment.” Miller v. Kasden (In re Kasden), 141 F.3d 1288, 1290 (8th Cir.1998).
Therefore, in light of the requirements of Rule 55 and Eighth Circuit caselaw, a bankruptcy court must review the underlying complaint to determine whether the necessary facts to support a claim for relief have been pleaded before granting default judgment. Price v. America’s Serv’g Co. (In re Price), 377 B.R. 224, 225 n. 1 (Bankr.E.D.Ark.2007) (citing Kasden).
The Complaint alleged the following causes of action: declaratory judgment, injunctive relief, turnover, and fraudulent and avoidable transfers. The elements of each of those causes of action are set forth below:
1. Count I declaratory judgment that debtor ignored corporate formalities and used RHFP and BFLP to defraud creditors.
a. The court can pierce the corporate veil and disregard the corporate facade when the corporate entity is the alter ego of the debtor and the debtors use corporate assets as then-own, with no regard for corporate structure. St. Francis County *836Farmers Ass’n v. Wright (In re Wright), 353 B.R. 627, 648 (Bankr.E.D.Ark.2006).
b. Minnesota courts use a two-step analysis in determining whether an entity is the alter ego of an individual. United States v. Scherping, 187 F.3d 796, 802 (8th Cir.1999), cert. denied, 528 U.S. 1162[, 120 S.Ct. 1175, 145 L.Ed.2d 1084] (2000). First, the court considers the relationship between the corporation and the individual, focusing on factors such as the failure to observe corporate formalities, siphoning of funds by the individual, absence of corporate records, and the existence of the corporation as merely a facade for the individual. Id. Next, the court considers the nature of the relationship between the corporation and the party seeking to disregard it; the entity will be disregarded only if it has operated in a fraudulent or unjust manner toward that party. Id. “[W]here the formalities of corporate existence are disregarded by one seeking to use it, ... [the] existence [of the corporation] cannot be állowed to shield the individual from liability for damages incurred by those dealing with the corporation.” Id. (quoting Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d 509, 512 (Minn.1979)).
2.Count II injunctive relief pursuant to 11 U.S.C. § 105.
The bankruptcy court can apply its equitable powers under § 105(a) to enjoin the defendants’ interference with the estate and its assets if the Dataphase factors support such a decision. The court should consider (1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on the other parties; (3) the probability that the movant will succeed on the merits; and (4) public interest. Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 114 (8th Cir.1981).
3. Count III turnover.
a. The Code requires any entity in possession, custody, or control of estate property to deliver such property to the trustee or account for its value. § 542(a).
b. The debtor acknowledged at the § 341 meeting that he deposited personal funds into the corporate accounts to protect the funds from creditors.
4. Counts VI and VII avoidance of diamond ring and BMW security interests under § 544.
11 U.S.C. § 544(b) authorizes the trustee to exercise an existing unsecured creditor’s right to avoid a transfer if the creditor holds such a right under non-bankruptcy law. If the trustee identifies such a creditor with an allowable claim and a valid right to avoid the transfer, the trustee may avoid the claim and recover the entirety of the property or value of the property “for the benefit of the estate.” 11 U.S.C. § 550(a); Stalnaker v. DLC, Ltd., 376 F.3d 819, 823 (8th Cir.2004).
5. Counts VII and IX avoidance of diamond ring and BMW security interests under § 547.
Section 547(e)(2) establishes the time at which a transfer is considered to have been made, and if the transfer has not been perfected within an allowed time, the transfer is deemed to have occurred pre-petition.
*837Although the Complaint did not use the phrase “pierce the corporate veil,” it did clearly lay out the factual allegations necessary to support a claim for relief based upon the “alter ego” theory under Minnesota law as referred to above. The Complaint describes in detail how Burwell controlled the bank accounts of the two entities, even though he claimed to have no ownership or other interest in them. A summary of such allegations is contained in the “Complaint” section above and, to avoid unduly lengthening this opinion, those factual allegations will not be repeated here.
After detailing Burwell’s actions concerning the partnership accounts, the Complaint specifically asserts, at paragraph 27, that the “Debtor controlled each RHFP and BFLP and he is the beneficial owner of assets held in their names and they are his alter ego. The assets of each are therefore, and should be considered to be assets of this bankruptcy estate.” Then, in Count I, at paragraphs 38 and 39, the Complaint alleges that, with respect to each entity, the Debtor utilized them as instruments to defraud his creditors, corporate formalities were ignored, their sole purpose was to protect assets of the Debt- or and each was simply a facade for the Debtor. Suffice it to say that the allegations fully supported each claim for relief.
CONCLUSION
The Trustee’s Complaint supplied detailed factual allegations, as described above, sufficient to support each claim for relief. Upon the failure of the appellants to respond to the Complaint, it was not an abuse of discretion for the trial court to enter the default judgment, and the judgment is affirmed.
. The Honorable Nancy C. Dreher, who was appointed Chief Judge of the United States Bankruptcy Court for the District of Minnesota on September 25, 2007, after the judgment referred to herein was entered.