deepening insolvency

New Article Examines Latest Deepening Insolvency Trends

Bob Eisenbach — Wed, 27 Feb 2008 23:04:06 +0000

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 – Courts Now Rejecting Theory As Cause Of Action…

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

Bob Eisenbach — Thu, 16 Aug 2007 04:58:06 +0000

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 and for the reasons assigned…

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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

Bob Eisenbach — Tue, 22 May 2007 05:10:30 +0000

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 whether creditors can sue directors of…

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

Bob Eisenbach — Tue, 03 Apr 2007 02:41:01 +0000

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 for "deepening insolvency" under Delaware law.

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

Bob Eisenbach — Mon, 18 Sep 2006 15:57:19 +0000

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: A copy of the decision is available here. Thanks to the Delaware Business…

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

Bob Eisenbach — Fri, 18 Aug 2006 04:20:07 +0000

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 is the lack of clarity…

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