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The Fiduciary Duties of Directors of Troubled Companies
Ist Teil von
American Bankruptcy Institute journal, 2015-02, Vol.34 (2), p.18
Ort / Verlag
Alexandria: American Bankruptcy Institute
Erscheinungsjahr
2015
Link zum Volltext
Quelle
Business Source Ultimate
Beschreibungen/Notizen
Directors and officers of financially distressed companies often face complicated, high-pressure decisions in fulfilling their fiduciary duties. For years, practitioners, legal scholars and even judges had struggled with whether (and when) directors and officers owed such duties to creditors as a company approached or entered insolvency. Courts in Delaware -- the state of incorporation for many US companies -- have sought to clarify the issue in two seminal decisions of the past decade. The decisions in these cases, North American Catholic Educational Programming Foundation Inc v. Gheewalla and Trenwick America Litigation Trust v. Ernst & Young, held that the duties owed to the corporation do not change as it nears insolvency or becomes insolvent. Under Delaware law, directors owe a duty of loyalty and a duty of care.