Client Alerts

Delaware Court of Chancery Issues Significant Opinion on Corporate Creditors; Addresses Fiduciary Duties, Standing, and Measure of Insolvency

In an opinion issued on May 4, 2015, Quadrant Structured Products Co., Ltd. v. Vertin, the Court of Chancery provided important guidance to distressed Delaware corporations and their creditors.  Among other things, the Court (i) summarized directors’ fiduciary duty to creditors, (ii) held that a creditor has standing to bring a derivative suit if the corporation is insolvent at the commencement of the suit, even if the corporation subsequently becomes solvent, and rejected an “irretrievably insolvent” element to establishing insolvency for standing purposes and (iii) discussed the measure of “assets” for purposes of determining solvency under the balance sheet test.

Click here to download the Morris Nichols analysis of the opinion.

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