What Happens When Your Company Is ‘In The Zone?’

Law360, New York (November 17, 2009, 1:40 PM EST) -- In a troubled economy where businesses are struggling to survive, it is no surprise that many organizations find themselves insolvent or nearly insolvent.

Directors of insolvent or nearly insolvent organizations are facing the question of to whom they owe their duty of loyalty, and whose best interest they must consider when making decisions.

When in the zone of insolvency, directors still owe a duty to stakeholders to act in their best interests.

Judicial decisions in some jurisdictions, however, have suggested that when an organization is insolvent...
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