In the Red – The Business Bankruptcy Blog

In the Red – The Business Bankruptcy Blog

The Business Bankrupty Blog

Tag Archives: directors

Winter 2012 Edition Of Bankruptcy Resource Now Available

Posted in Business Bankruptcy Issues, Recent Developments
The Winter 2012 edition of the Absolute Priority newsletter, published by the Bankruptcy & Restructuring group at Cooley LLP, of which I am a member, has recently been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy of the newsletter. You can … Continue Reading

Delaware Supreme Court Affirms Ruling Protecting Managers Of Insolvent LLCs

Posted in Recent Developments, The Financially Troubled Company
Creditor Derivative Claims Against Fiduciaries Of Insolvent Corporate Entities. In a 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d 92 (Del. 2007), the Delaware Supreme Court held that directors of an insolvent Delaware corporation could be sued derivatively by creditors for breaches of fiduciary duty. For a discussion of the … Continue Reading

New Ruling Finds Important Protection For Managers Of Insolvent Delaware LLCs

Posted in Recent Developments, The Financially Troubled Company
Derivative Claims Against Directors Of An Insolvent Delaware Corporation. With its 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d 92 (Del. 2007), the Delaware Supreme Court held that directors of an insolvent Delaware corporation could be sued derivatively by creditors for breaches of fiduciary duty. To read that decision, … Continue Reading

California Court of Appeal Provides Guidance For Directors Of Financially Distressed California Corporations

Posted in Recent Developments, The Financially Troubled Company
As I have reported over the past several years, Delaware courts, including the Delaware Supreme Court, have addressed the nature of a director’s fiduciary duties when a Delaware corporation is insolvent or in the "zone of insolvency," most notably with the 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d … Continue Reading

Recent California Decision Addresses Whether Directors And Officers Can Be Liable For Unpaid Wages Of A Bankrupt Company

Posted in Recent Developments, The Financially Troubled Company
When insolvent companies are unable to make payroll or to pay accrued vacation or other amounts owed employees, the question often arises whether directors, officers, or shareholders face personal liability for these unpaid amounts. The California Court of Appeal recently addressed that issue, examining whether particular sections of the California Labor Code, as well as section … Continue Reading

New Article Examines Latest Deepening Insolvency Trends

Posted in Business Bankruptcy Issues, The Financially Troubled Company
For a number of years, the concept of deepening insolvency has been one of the more hotly debated issues in the insolvency arena. Two of my colleagues in the Bankruptcy & Restructuring group at Cooley Godward Kronish LLP, Michael Klein and Ronald Sussman, have written an interesting article entitled "Tide Has Turned On Deepening Insolvency – … Continue Reading

Delaware Supreme Court Issues Long-Awaited Decision In Deepening Insolvency Case

Posted in Business Bankruptcy Issues, Recent Developments, The Financially Troubled Company
On August 14, 2007, the Delaware Supreme Court, sitting en Banc and following oral argument, issued its decision in the Trenwick America Litigation Trust v. Billet deepening insolvency case. Rather than write its own opinion, the Delaware Supreme Court released a two-page order affirming Vice Chancellor Strine’s August 10, 2006 Chancery Court decision "on the basis of … Continue Reading

Who Gets The Benefit Of A D&O Policy’s Proceeds, The Directors And Officers Or A Bankruptcy Trustee?

Posted in Business Bankruptcy Issues, Recent Developments, The Financially Troubled Company
On June 8, 2007, Delaware Bankruptcy Judge Kevin Gross issued a decision in the World Health Alternatives, Inc. bankruptcy case that corporate directors, officers, attorneys, and bankruptcy professionals alike will find of interest. A copy of the Court’s 13-page decision and short order is available here. The Three-Sided D&O Policy. The issue in the case was whether … Continue Reading

Delaware Supreme Court Addresses, For The First Time, Whether Creditors Can Sue Directors For Breach Of Fiduciary Duty When The Corporation Is Insolvent Or In The Zone Of Insolvency

Posted in Recent Developments, The Financially Troubled Company
Almost sixteen years ago, the Delaware Chancery Court’s decision in Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications Corp., 1991 WL 277613 (Del. Ch. 1991), helped introduce the terms "vicinity of insolvency" and "zone of insolvency" into the legal and business lexicon. Since then, the Chancery Court issued a number of decisions on the question of … Continue Reading

Report On The Delaware Supreme Court’s Recent Oral Argument In The Trenwick America Deepening Insolvency Case

Posted in Recent Developments, The Financially Troubled Company
One of the most important recent decisions by the Delaware Court of Chancery in the insolvency area was the August 10, 2006 opinion in the Trenwick America Litigation Trust case. As discussed at length in an earlier post, the Trenwick America decision by Vice Chancellor Strine (available here) squarely held that there was no cause of action … Continue Reading

New Delaware Decision Limits Direct Creditor Claims Against Directors In The “Zone Of Insolvency”

Posted in Recent Developments, The Financially Troubled Company
The Delaware Court of Chancery has issued another decision involving creditor claims against directors of a financially troubled corporation. In North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 2006 WL 2588971 (Del. Ch. Sept. 1, 2006), Vice Chancellor Noble made two important holdings: First, although derivative claims can be brought, creditors may not assert … Continue Reading

Deepening Insolvency: New Delaware Decision Holds That No Such Cause Of Action Exists

Posted in Recent Developments, The Financially Troubled Company
Over the past few years, a number of bankruptcy and other federal courts have held that plaintiffs, often bankruptcy trustees or other bankruptcy estate representatives, could pursue a cause of action against a corporation’s directors and others for "deepening insolvency."  What has made a deepening insolvency claim so attractive to plaintiffs and troubling to defendants … Continue Reading

Directors Of Insolvent Corporations: Duties And Protections

Posted in Recent Developments, The Financially Troubled Company
The fiduciary duties that directors owe a Delaware corporation and its shareholders are generally held to expand to include the interests of creditors when the company is insolvent or in the "zone of insolvency."  A hot topic among directors, particularly those serving on boards of troubled companies, is how best to meet their fiduciary duties … Continue Reading