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Georgia Bankruptcy Blog

Category Archives: Corporate & Fiduciary Litigation

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Bankruptcy Trustee Of Raving Brands, Inc. (Moe’s, Doc Greens, Flying Biscuit, Monkey Joe’s) Files Suit Against Former Owners, Officers And Related Entities, Alleges Fraud, Deception and Breach Of Fiduciary Duties

Posted in Corporate & Fiduciary Litigation, News and Comments, Northern District Cases
The Chapter 7 Trustee of Raving Brands, Inc.  filed on August 16, 2012 an adversary proceeding against several former owners, officers and directors of the Debtor, as well as several affiliated companies, alleging, inter alia, that the parties engaged in a widespread effort to deceive the public, its franchisees, the press, courts and its creditors. … Continue Reading

Can Creditors File A Derivative Action Against Limited Liability Company?

Posted in Corporate & Fiduciary Litigation, Georgia State Cases, Miscellaneous Cases, News and Comments, Small Business Bankruptcy
In CML V, LLC v. Bax, No. 735, 2010 (Del. Supr. Sept. 2, 2011) (click here for .pdf of opinion), the Delaware Supreme Court addressed the questions of whether a creditor can file a derivative action against a limited liability company.   Plaintiff CML asserted the following derivative claims against the present and former members of … Continue Reading

Assignments of Trademarks in Bankruptcy – Judge Posner and 7th Circuit Provide Answer

Posted in Corporate & Fiduciary Litigation, Miscellaneous Cases, News and Comments, Small Business Bankruptcy
The Seventh Circuit Court of Appeals has issued the first published Circuit Court opinion on the question of whether trademarks are assignable in a Bankruptcy case.  The opinion, authored by Judge Posner, is in the case of In re XMH Corp., Nos. 10-2596, 10-2597, 10-2598, 10-2599,  2011 U.S. App. LEXIS 15372 (7th Cir. July 26, 2011) (click … Continue Reading

Lawsuits Being Flying Against Officers, Directors, Insiders And Professionals Of Failed Banks

Posted in Corporate & Fiduciary Litigation, Georgia State Cases, Miscellaneous Cases, News and Comments, Northern District Cases
The State of Georgia is among the national leaders in banks closed by state and federal agencies.  So far in 2011, six Georgia banks have been closed, with the latest two being Habersham Bank and Citizens Bank of Effingham.  Since late 2008, when the banking crisis hit, a total of fifty seven Georgia banks have … Continue Reading

Delaware Bankruptcy Court: Directors’ Duties To Financially Distressed Companies

Posted in Corporate & Fiduciary Litigation, Miscellaneous Cases
Bridgeport Holdings Inc. Liquidating Trust v. Boyer (In re Bridgeport Holdings, Inc.), 2008 WL 2235330 (Bankr. D. Del. May 30, 2008). Summary:  Liquidating trust brought adversary proceeding against Chapter 11 debtors’ former officers and directors and restructuring professional appointed to position of chief operating officer (COO), asserting claims for breach of fiduciary duty and lack … Continue Reading

Delaware Bankruptcy Court: Breach of Fiduciary Duty Claim Was Not Disguised Deepening Insolvency Claim; Aiding And Abetting Fraudulent Conveyance; In Pari Delicto

Posted in Corporate & Fiduciary Litigation, Miscellaneous Cases
From the Delaware Bankruptcy Blog, comes the case of  Miller v. McCown De Leeuw & Co., Inc. (In re Brown Schools), No. 05-10841, Adv. No. 06-50861 (Bankr. D. Del. April 24, 2008). Duty of care violations more closely resemble causes of action for deepening insolvency because the alleged injury in both is the result of … Continue Reading

Delaware Chancery Court Holds Directors Did Not Breach Fiduciary Duty To Creditors By Filing Chapter 11 Petition

Posted in Corporate & Fiduciary Litigation, Miscellaneous Cases
From the Delaware Litigation Blog comes the case of  Nelson v. Emerson, 2008 WL 1961150 (Del. Ch., May 6, 2008) (the opinion is linked from the Delaware Litigation Blog), where the one major secured creditor alleged the directors of the corporation breached their fiduciary duty to the creditor by filing a Chapter 11 petition and … Continue Reading

Georgia Court Of Appeals Upholds Expansive Scope Of Personal Jurisdiction

Posted in Corporate & Fiduciary Litigation, Georgia State Cases
By: Scott B. Riddle, Esq. Vibratech, Inc. v. Frost, et al., 2008 WL 1704091 (Ga. App. March 27, 2008). Although this Georgia Court of Appeals opinion involves a bankruptcy issue, it is more important for the discussion and holding on personal jurisdiction.  This case indicates that a defendant can be hauled into Georgia Courts based on … Continue Reading

Delaware Bankruptcy Court Imposes Caremark Duty Of Care On Corporate Officers

Posted in Corporate & Fiduciary Litigation
Francis Pileggi, in this post, discusses the Delaware Bankruptcy Court’s opinion in the case of Miller v. McDonald (In re World Health Alternatives, Inc.),  2008 WL 1002035  ( Bankr., Del. April 9, 2008) (pdf opinion here). In this opinion on a motion to dismiss claims against an officer of a company, the Bankruptcy Court relied on decisions of the Delaware … Continue Reading

Deepening Insolvency Trends

Posted in Corporate & Fiduciary Litigation
I have written about the waning popularity of deepening insolvency  (and here) as a cause of action.  Bob Eisenbach refers to a new article by his colleagues in the Bankruptcy & Restructuring group at Cooley Godward Kronish LLP, Michael Klein and Ronald Sussman. The article is entitled "Tide Has Turned On Deepening Insolvency – Courts Now Rejecting … Continue Reading

Directors Of Corporation Cannot Sue Derivatively If They Are Not Shareholders

Posted in Corporate & Fiduciary Litigation
In the corporate litigation field, the Delaware Supreme Court has held that directors of Delaware corporations, who are not shareholders of the corporation, cannot assert derivative claims against fellow directors.  While this issue may not arise often, it is important as many corporations are governed by Delaware law, and other states follow Delaware law. The … Continue Reading

US Supreme Court Decides Stoneridge Investment Partners v. Scientifc-Atlanta; Limits Investor Fraud Lawsuits

Posted in Corporate & Fiduciary Litigation, US Supreme Court Cases
By: Scott B. Riddle, Esq. This is not a bankruptcy case, but it will be applicable in many large bankruptcy cases involving allegations of fraud by shareholders or investors. On January 15, 2008, the United States Supreme Court entered an important decision in Stoneridge Investment Partners v. Scientific-Atlanta (06-43) (click here to download the opinion). There … Continue Reading

Delaware Court Orders Production of Documents For Period Prior To Stock Ownership

Posted in Corporate & Fiduciary Litigation
The Harvard Law Corporate Governance Blog Blog summarizes a Delaware Chancery case that might apply to lawsuits nationwide involving businesses incorporated in Delaware.  Note that the decision is based upon the Corporate Code, applicable to Delaware corporations, and not jurisdictional discovery rules – Chancery Orders Production of Records for Periods Prior to Stock Ownership, by Francis G.X. Pileggi, Fox Rothschild … Continue Reading

More Commentary On Delaware Supreme Court’s Decision In North American Catholic Educational Programming Foundation, Inc. v. Gheewalla

Posted in Corporate & Fiduciary Litigation, News and Comments
By: Scott B. Riddle, Esq. In the last week, since the Delaware Supreme Court’s opinion in North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, several lawyers and scholars have posted discussion about the case and holding: Bob Eisenbach, Esq. at the Business Bankruptcy Blog. Francis Pileggi, Esq. at the Delaware Litigation Blog. Professor Stephen Bainbridge.  Professor Larry … Continue Reading

Delaware Supreme Court Holds That Creditors Cannot Bring Direct Claims For Breach Of Fiduciary Duty During Zone Of Insolvency

Posted in Corporate & Fiduciary Litigation, Miscellaneous Cases
By: Scott B. Riddle, Esq.  I have previously posted (follow the link to the Delaware Litigation Blog) on the subject of whether creditors have a direct action against directors of a corporaton that has entered the zone of insolvency.  Chief Justice Steele’s comments were prophetic.  Yesterday, in an opinion that will likely have a far reaching … Continue Reading

Fiduciary Duty To Creditors During “Zone of Insolvency.”

Posted in Corporate & Fiduciary Litigation, News and Comments
By: Scott B. Riddle, Esq. Francis Pileggi at the Delaware Litigation Blog has posted a summary of comments made by Delaware Supreme Court Chief Justice Myron Steele at the Spring meeting of the American Bar Association, concerning developments in Delaware corporate law and recent Delaware Supreme Court cases. Francis credits Mark Saltzburg with the summary of the speech.  … Continue Reading

Texas Bankruptcy Court Finds Georgia Courts Would Not Recognize Tort of Deepening Insolvency; Denies Motion To Dismiss Based On Exculpation Provision

Posted in Corporate & Fiduciary Litigation, Miscellaneous Cases
Posted By: Scott B. Riddle, Esq. In Kaye v. Dupree, et al. (In re Avado Brands, Inc.), Adv. No. 05-3823, 2006 Bankr. LEXIS 3631 (Bankr. N.D. Tex. December 28, 2006), the Trustee of the Debtor’s Litigation Trust filed a post-confirmation suit against the Debtor’s former officers and directors.  The causes of action included preferential transfers, … Continue Reading

New Posts Discussing Fiducuary Duty Of Due Care and Stone v. Ritter

Posted in Corporate & Fiduciary Litigation, News and Comments
By: Scott B. Riddle, Esq. I previously posted about the Delaware case of Stone v. Ritter, (Del. Supr., Nov. 6, 2006), in which the Delaware Supreme Court "clarified its position on whether "good faith" is a separate stand-alone duty, in the same way as loyalty and due care are."  There the court stated – First, although … Continue Reading

New Category: Corporate and Fiduciary Litigation

Posted in Corporate & Fiduciary Litigation, News and Comments
By: Scott B. Riddle, Esq. While the focus of the Blog is on Bankruptcy law and cases, there is also a significant overlap with corporate and fiduciary litigation cases and commentary.  It is common for causes of action such as breach of fiduciary duty, corporate waste, deepening insolvency (where it exists), and similar claims to … Continue Reading

Aiding And Abetting Breach Of Fiduciary Duty — Did The Georgia Court Of Appeals Create An Unworkable Definition?

Posted in Corporate & Fiduciary Litigation, Georgia State Cases
By: Scott B. Riddle, Esq.   In a prior post, I noted that the Georgia Court of Appeals had recognized a cause of action for aiding and abetting breach of fiduciary duty.  You can review that post for lengthy excerpts from the opinion in Insight Technology, Inc. v. Freightcheck, Inc., No. A06-0710, Ga. App. LEXIS 738, 2006 … Continue Reading