Saving Failed Biz Insiders From Fiduciary Duty Claims

Law360, New York (April 12, 2011, 1:20 PM EDT) -- Bankruptcy trustees for debtor corporations often seek to recover funds for the creditors from the company’s former directors and officers and their insurance carriers. In addition to the traditional tool-kit of causes of action under bankruptcy law — e.g., actions for voidable preferences, fraudulent conveyances — trustees are increasingly looking to state-law breach of fiduciary duty claims.

Faced with such claims, directors have defended with a variety of arguments. Two arguments, in particular, have been successfully raised in recent litigation to prevent trustees from maintaining fiduciary...
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