Fiduciary Duties of Directors of Distressed Companies (DE)

Summary

This practice note discusses the fiduciary duties of the board of directors of a financially troubled Delaware corporation and provides guidance to its counsel in complying with such fiduciary duties. When a corporation is in financial trouble, its board of directors must take special care to comply with its fiduciary duties to the corporation. Delaware case law has clarified how the corporation's financial condition affects fiduciary duties, resolving many years of confusion regarding what duties were owed to what constituencies at various points in the insolvency process.