Quadrant Structured Prods. Co., LTD. v. Vertin, 115 A.3d 525 (Del. Ch. 2015)

Did you know as an officer or director of a Delaware corporation you may owe fiduciary duties to creditors and not just shareholders? If your company is insolvent, you do. But directly or derivatively? What duties? And what if your company later becomes solvent? The Court of Chancery decision Quadrant Structured Products Company, LTD. v. Vertin from earlier this year went a long way to clarifying this area of the law.

When entrepreneurs decide to embark upon a new endeavor, they must first decide the form of entity to be used in conducting their business. Do they want to incorporate the business, and if so should they elect Subchapter S status? Would they be better served by forming a limited liability company, a limited liability partnership, or a general partnership? Each of these entities has its own beneficial characteristics when considering tax consequences, ease of operation, and potential liabilities of the individual entrepreneurs.