Tenn. Court Bars Creditors' Breach Of Duty Claims

Law360, New York (December 20, 2010, 8:41 PM EST) -- The Tennessee Supreme Court has ruled that individual creditors of a bankrupt corporation cannot bring a direct claim of action for breach of fiduciary duty against corporate directors and officers, and are only allowed to bring derivative claims.

In a unanimous decision Friday in a case involving defunct home security company SecureOne Inc., the state's high court adopted the reasoning used in a similar ruling by the Delaware Supreme Court, and reversed a decision by the Court of Appeals of Tennessee.

The case, which presented an...
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