Court Signals Greater Protection For Business Judgment

Law360, New York (September 5, 2006, 12:00 AM EDT) -- It is becoming increasingly common for bankruptcy trustees, creditors' committees and post-bankruptcy litigation trusts, in the aftermath of a business failure, to pursue "deep pocket" defendants, claiming that a company's directors and officers—and outside professionals—were responsible for the company's demise and the creditors' losses.

A recent decision of the Delaware Chancery Court in the case of Trenwick America Litigation Trust v. Ernst & Young, L.L.P., et al., Case No. 1571-N (Del. Ch. Aug. 10, 2006), written by Vice Chancellor Strine, may provide substantial protection to defendants...
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