“Can I be personally liable?” Directors, officers, and managers of business entities frequently ask that question of their attorneys. A recent Delaware decision reveals an important area of potentially huge personally liability involving a sudden shutdown caused by insolvency.

In September 2014, amid “deteriorating financial health” and a “desperate” financial situation, Atlantic City, New Jersey’s Trump Taj Mahal filed for Chapter 11 bankruptcy protection. Around that same time, the Taj Mahal was attempting to bargain with UNITE HERE Local 54 (the “Union”) to renegotiate the parties’ collective bargaining agreement (the “CBA”) prior to its expiration on September 14, 2014. The parties were unable to reach agreement and the CBA expired.