Delaware Court of Chancery issues significant ruling on the ability of creditors to assert fiduciary duty claims against directors: key takeaways

In Quadrant Structured Products Co. v. Vertin, 2015 WL 2062115 (Del. Ch. May 4, 2015), the Delaware Court of Chancery (Vice Chancellor J. Travis Laster) announced a bright-line standard governing the threshold inquiry of when a creditor can maintain a derivative suit against directors for breach of fiduciary duty. The court held that a creditor need only establish that the company was balance sheet insolvent at the time the suit was filed and that the creditor’s standing will not be extinguished if the company rides back into solvency during the litigation.

Filed under:
USA, Delaware, Company & Commercial, Insolvency & Restructuring, Litigation, DLA Piper, Fiduciary, Board of directors, Credit default swap, Derivative suit, Delaware Court of Chancery, Delaware Supreme Court
Authors:
John L. Reed , Henry duPont Ridgely
Location:
USA
Firm:
DLA Piper