Recent Developments

Derivative Claims Against Directors Of An Insolvent Delaware Corporation. With its 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d 92 (Del. 2007), the Delaware Supreme Court held that directors of an insolvent Delaware corporation could be sued derivatively by creditors for breaches of fiduciary duty. To read that decision, click on the case name in the prior sentence.

The Fall 2010 edition of the Absolute Priority newsletter, published by the Cooley LLP Bankruptcy & Restructuring group, of which I am a member, has just been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area.

Trademark licensees have long faced the serious risk of losing all license rights to a trademark if the licensor files bankruptcy and rejects the trademark license as an executory contract. However, a recent decision from the U.S. Court of Appeals for the Third Circuit in the In re: Exide Technologies case may give some trademark licensees new hope of retaining their license rights even in bankruptcy.

As discussed in an earlier post called "On The Rise: Bankruptcy Dollar Amounts Will Increase On April 1, 2010," various dollar amounts in the Bankruptcy Code and related statutory provisions were increased for cases filed on or after April 1, 2010. Now several official bankruptcy forms have been revised to reflect these new dollar amounts.

As I have reported over the past several years, Delaware courts, including the Delaware Supreme Court, have addressed the nature of a director's fiduciary duties when a Delaware corporation is insolvent or in the "zone of insolvency," most notably with the 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d 92 (Del. 2007). To read that decision, click on the case name in the prior sentence.