News & Analysis as of

Fiduciary Duty Breach of Duty Commercial Bankruptcy

Whiteford

Client Alert: Bankruptcy Meets State Court: Lessons from a $4M Escrow Dispute - June 30, 2025

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When bankruptcy courts and state courts vie for authority in complex financial disputes, the outcome can reshape recoveries for creditors, investors, and businesses. This tension was front and center in Silverman v....more

Allen Matkins

Nevada Supreme Court: Chapter 7 Filing Defeats Shareholder Breach Of Fiduciary Claim

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Globe Photos, Inc. owned a portfolio of millions of images of celebrities and musicians, including Marilyn Monroe, the Beatles, and Jimi Hendrix, some taken by famous photographers such as Frank Worth.  Despite these assets,...more

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

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As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of...more

Nelson Mullins Riley & Scarborough LLP

Practice Pointer: Reliance on Bankruptcy Court Appointed Examiner’s Report—Not so Fast

You represent the unsecured creditors committee in a complex Chapter 11 case, where you have reason to believe that the debtor’s officers and directors have, and continue to, engage in self-dealing and are breaching their...more

Robins Kaplan LLP

We Don’t Talk About Insolvency (No, No, No …)

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As a parent of three young children, Disney’s excellent new movie, Encanto, has been on heavy rotation in my household. It’s a story of an extended family whose members possess unique magical gifts. Through several humorous...more

Patton Sullivan Brodehl LLP

LLC Operating Agreements Can Reduce Fiduciary Duties

LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership.  (Corp Code §17704.09.)  These include the duty of loyalty, care, and...more

Winstead PC

Bankruptcy Court Discussed The Fiduciary Duties Owed To A Limited Liability Company And Its Creditors By Its Manager

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In In re Silver State Holdings, in a bankruptcy proceeding a trustee of a limited liability company sued its former manager for breach of fiduciary duty and another entity for conspiracy to breach fiduciary duty arising out...more

Sheppard Mullin Richter & Hampton LLP

Nota Bene Episode 94: Mapping COVID-19’s Impact on American Bankruptcy and Restructuring with Edward Tillinghast

Multinational boards are facing a major dilemma in response to COVID and its impact on their business forecasting. Many companies are facing insolvency and are left to decide how to approach bankruptcy proceedings. We’re...more

Rivkin Radler LLP

New York Insurance Coverage Law Update

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United States District Court Orders Insured To Produce Certain Pre-Litigation Documents But Not Others Deemed Work Product 99 Wall sued Allied World seeking coverage under a property policy for water losses at 99 Wall’s...more

Akin Gump Strauss Hauer & Feld LLP

Top 10 Topics for Directors in 2020: Economic Downturn

Significant economic, regulatory and political uncertainties in 2020 should prompt board of directors members to evaluate, and take steps to mitigate, potential downside risks facing their businesses. Certain challenges...more

Dorsey & Whitney LLP

The Supreme Court - January 14, 2020

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Today, the Supreme Court of the United States issued two opinions: Ritzen Group, Inc. v. Jackson Masonry, LLC, No. 18-938: After petitioner Ritzen Group brought a breach of contract claim against respondent Jackson Masonry...more

Mintz - Bankruptcy & Restructuring Viewpoints

Are Bankruptcy Blocking Provisions in Corporate Governance Documents Enforceable?

It has long been the law that creditors are rarely entitled to contractually prohibit a debtor from filing for bankruptcy, whether such restriction is contained in the debt instruments or in the corporate governance...more

Skadden, Arps, Slate, Meagher & Flom LLP

Delaware Court Precludes Creditors of Limited Partnership From Pursuing Derivative Claims

In several cases since the seminal 2011 Delaware Supreme Court decision CML V LLC v. Bax, which held that creditors of Delaware LLCs lack standing to pursue derivative claims, the U.S. Bankruptcy Court for the District of...more

Spilman Thomas & Battle, PLLC

Trade Secret Misappropriation and Employee Fiduciary Breach in ASML v. XTAL Results in Large Judgement

On May 3, 2019, following a jury verdict rendered last November, a Santa Clara, California court entered a final judgment for $845 million in favor of semiconductor maker, ASML, in its suit against rival, XTAL, for stealing...more

Amundsen Davis LLC

A Lesson On Good Corporate Governance?

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While on its face, a recent decision from the United States Court of Appeals for the 7th Circuit discusses what is not included in the duties of an officer, one can glean from the decision the importance that a Board of...more

Skadden, Arps, Slate, Meagher & Flom LLP

Bax Limits Standing to Pursue Derivative Claims in Bankruptcy

Since the Delaware Supreme Court held in CML V, LLC v. Bax that creditors of a Delaware LLC lack standing to pursue derivative breach-of-fiduciary-duty claims, even if the LLC is insolvent or near insolvent, bankruptcy courts...more

Pillsbury Winthrop Shaw Pittman LLP

Officers’ Duty to Obey Board of Directors’ Instructions Overrides Duty to Provide Information

Citing duty to obey the board’s lawful instructions, the Seventh Circuit rejects breach of fiduciary duty claims under Indiana law against bankrupt bank holding company’s former officers. Corporate officers of a distressed...more

Cole Schotz

The Fifth Circuit Considers Enforceability Of Blocking “Golden Share” Provisions

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Bankruptcy remote structures have become common in recent years to attempt to prevent a borrower from filing for Chapter 11. One such structure is commonly referred to as a “golden share.”...more

Fox Rothschild LLP

Bankruptcy Court Grants Motion To Dismiss Based Upon Affirmative Defense

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When deciding a motion to dismiss a complaint pursuant to Federal R. Bankr. 7008, which incorporates Rule 12(b)(6), a court must accept all factual allegations in the complaint as true and construe all inferences from those...more

Patterson Belknap Webb & Tyler LLP

Third Circuit Enforces Plan Releases Against Later-Purchasing Shareholders Bringing Claims Concerning Post-Confirmation Conduct

Bankruptcy plans often include provisions releasing debtors and their officers and directors from certain potential liability. In Zardinovsky v. Arctic Glacier Income Fund, No. 17-2522 (3d Cir. Aug. 20, 2018), the United...more

Patterson Belknap Webb & Tyler LLP

Bankruptcy Remoteness Going to a Court of Appeals--Fifth Circuit Issues Speedy, Focused Affirmance of the Dismissal of the...

Our February 22 post (with updates on March 19, April 17 and April 25) reported on a bankruptcy court decision dismissing a voluntary corporate Chapter 11 petition that had not been approved by a preferred stockholder of the...more

Patterson Belknap Webb & Tyler LLP

Chapter 15: Decision Reviews Jurisdictional Issues and Bankruptcy Code Section 109

In a recent decision, In re B.C.I Fins. Pty Ltd. (In Liquidation), No. 17-11266, 2018 Bankr. LEXIS 1217 (Bankr. S.D.N.Y. Apr. 24, 2018), Judge Sean Lane granted a chapter 15 petition after rejecting a challenge to...more

Winstead PC

Bankruptcy Court In Texas Held That Client Did Not Adequately Plead An Aiding and Abetting Breach of Fiduciary Duty Claim Against...

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In In re Westech Capital Corp., a bankruptcy trustee sued a company’s former attorneys for breaching fiduciary duties and also for aiding and abetting the breach of fiduciary duty. No. 16-10300-TMD, 2018 Bankr. LEXIS 969...more

Robins Kaplan LLP

Your Daily Dose of Financial News

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No US? No big deal. At least when it comes to the once-and-future TPP pact, which Japan, Canada, Australia, and 8 other US allies signed yesterday in Santiago, Chile....more

Fox Rothschild LLP

Haggen’s Order Holds: Fiduciaries Who Enter Into “Foolish” Transactions But Who Are Acting In Good Faith Are Protected

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On January 22, 2018, in an adversary proceeding arising within the Haggen bankruptcy (Adv. No. 16-51204), Judge Gross of the Delaware Bankruptcy Court issued a ruling against the Plaintiff, denying the relief requested in the...more

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