The In Pari Delicto Defense Stiffens In The 1st Circ.

Law360, New York (December 1, 2008, 12:00 AM EST) -- The current economic crisis, not surprisingly, is causing an increase in corporate bankruptcies and related litigation. Once a corporation seeks bankruptcy protection, trustees, examiners and creditors committees will scrutinize the debtor’s pre-bankruptcy affairs.

Pre-petition professionals of the debtor, including auditors, investment bankers, financial advisors and attorneys, may face threatened or actual litigation over their roles in the debtor’s demise. These types of claims are often the estate’s primary unencumbered assets, and may be the sole means of funding a dividend to unsecured creditors.

Claims against a...
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