Board's Actions Critical For Cos. In Zone Of Insolvency

Law360, New York (October 10, 2008, 12:00 AM EDT) -- In the months before its historic Sep. 15 Chapter 11 filing, Lehman Brothers Holdings Inc. was denying rumors and speculation about its ill-health – and sailing the treacherous waters of what is known in bankruptcy law as the zone of insolvency.

“There's no bright line,” William P. Smith, a partner at McDermott Will & Emery, said of the exact moment when talk of insolvency leads to a bankruptcy filing. “It happens at some point, but you don't know when it is.”

Although the point when talk...
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