On September 2, the Delaware Supreme Court affirmed a holding by the Court of Chancery that creditors of insolvent Delaware limited liability companies do not have standing to sue derivatively. This contrasts with Delaware corporations: the Delaware courts have recognized that when a corporation becomes insolvent, creditors become the residual risk-bearers and are permitted to sue derivatively on behalf of a corporation to the same extent as stockholders.
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USA, Delaware, Company & Commercial, Insolvency & Restructuring, Litigation, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Shareholder, Credit (finance), Statutory interpretation, Fiduciary, Limited liability company, Standing (law), Derivative suit, Delaware General Corporation Law, Court of Chancery, Delaware Supreme Court, Court of equity
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