Law360 (April 30, 2010, 12:44 PM EDT) -- On Feb. 3, 2010, the California Supreme Court denied review of a significant decision by the California Court of Appeal, Sixth Appellate District, that limits a breach of fiduciary duty action brought by creditors against directors of an insolvent corporation under California law. Berg & Berg Enterprises LLC v. Boyle et al., 178 Cal. App. 4th 1020 (2009). California has now joined Delaware in holding that directors do not owe creditors a fiduciary duty, even when the corporation is operating in the so-called “zone of insolvency.”
The Berg case arose under the following circumstances: Berg & Berg Enterprises LLC (“Berg”), the...
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