Bankruptcy

Delaware Bankruptcy Court Imposes Caremark Duty Of Care On Corporate Officers

By Scott Riddle

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 Chancery Court and the Delaware Supreme Court to deny a motion to dismiss in the course of ruling that Caremark duties would be imposed on an officer (who was not a director), that was on the management team when the President of the company committed fraud and other actions and omissions that ultimately led to the bankruptcy filing of the company. This is notable in part because there are not as many decisions that address the fiduciary duties of officers, as opposed to directors of a corporation.

Full post as published by Georgia Bankruptcy Blog on April 14, 2008 (boomark / email).