Nonprofit governance and fiduciary duties: court holds directors personally liable for mismanagement
A recent court ruling highlights the need for robust governance practices for nonprofits, particularly those facing financial difficulties. The Third Circuit Court of Appeals affirmed a jury’s award of $2.25 million in compensatory damages against former directors and officers of a bankrupt nonprofit corporation - personal liability for breach of fiduciary duties and “deepening insolvency.”1 The court also affirmed punitive damages against the officer defendants, but vacated the award of punitive damages against the director defendants.
USA, Insolvency & Restructuring, Litigation, Non-profit Organizations, Seyfarth Shaw LLP, Punitive damages, Fiduciary
The opinion issued by the Delaware Supreme Court (the “Court”) in the matter of CML V, LLC v. Bax, No. 735, 2010 (Del. Supr. Sept.
USA, Delaware, Company & Commercial, Corporate Finance/M&A, Insolvency & Restructuring, Litigation, Winston & Strawn LLP, Legal personality, Fiduciary, Statute of limitations, Board of directors, Limited liability company, Standing (law), Secured creditor, Derivative suit, Court of Chancery, Delaware Court of Chancery, Delaware Supreme Court