Delaware Chancery Court Takes Fresh Look At Zone of Insolvency

Over a decade ago, a Delaware Chancery Court's footnote in <i>Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications</i>, 1991 WL 277613 (Del. Ch. 1991), established the "zone of insolvency" as something to be feared by directors and officers and served as a catalyst for countless creditor lawsuits. Claims by creditors committee and trustees against directors and officers for breach of fiduciary duties owed to creditors have since become commonplace. But in a decision that may have equally great repercussion both in the Boardroom and in bankruptcy cases, the Delaware Chancery Court has revisited zone-of-insolvency case law and limited this ever-expanding legal theory.

17 minute readDecember 27, 2004 at 08:56 AM
By
Luis Salazar
Delaware Chancery Court Takes Fresh Look At Zone of Insolvency

Over a decade ago, a Delaware Chancery Court's footnote in CreditLyonnais Bank Nederland, N.V. v. Pathe Communications, 1991 WL 277613 (Del. Ch. 1991), established the “zone of insolvency”

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