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Abstract:
In 2007, the Delaware Supreme Court considers two cases: North American Catholic Educational Programming Foundation, Inc. v. Gheewalla and Trenwick America Litigation Trust v. Ernst and Young, et al., both involving fiduciary duties to creditors. Not since Bovay v. H.M. Byllesby & Co., a 1944 corporate insolvency case decided upon the historical trust fund doctrine, has the Delaware Supreme Court had the opportunity to reexamine the state of Delaware case law on directorial duties to creditors at insolvency or the "vicinity of insolvency." On May 18, 2007, the Court held that "individual creditors of an insolvent corporation have no right to assert [direct] claims for breach of fiduciary duty against corporate directors." Given that these issues are equally applicable to direct or derivative fiduciary duties to creditors, will the Delaware Supreme Court will take the opportunity presented in Trenwick to eliminate the troublesome fiduciary derivative duty to creditors in favor of more rational, creditor-particular remedies.

The Delaware Supreme Court stands at a divide and thus should adopt a rational approach to the law of creditor rights by eliminating all derivative fiduciary duties in whatever context. This rational approach is dictated by: 1) the need for corporate management to be able to "engage in vigorous and good faith" negotiations with creditors in or near insolvency; 2) creditors' inability to meet the exacting legal standards required to bring a derivative suit; 3) the unfair exposure that advisors to corporate directors suffer under the Delaware regime after Gheewalla; and 4) the lack of rationality of the present day "duty to creditors" to its historical underpinnings (the trust fund doctrine) which required unjust enrichment of corporate management at the expense of the corporate enterprise.

insolvency, duty of directors, fiduciary duties, derivative actions

Abstract:
The thesis of this paper focuses on the statutory policy of "freedom of contract" in Delaware unincorporated entity law and the confusion of some courts in applying these contractarian principles in the face of, what would have been, traditional fiduciary duties. What has resulted is a muddle in the case law caused by the similarity in the terms good faith, in the context of the duty of good faith in contract law, and the term good faith as it is used in the law of business organizations to describe a fiduciary duty of care or the standard of conduct for a director in a corporation. Similarly, puzzlement results when litigators or courts mistakenly interchange the contract term fair dealing with the judicial standard of entire fairness traditionally reserved for the review of conduct by disloyal fiduciaries. In Delaware, it is time for corporate principles to remain in the realm of corporate law and the corpfuscation of unincorporated law to end.

Delaware corporations, good faith

Abstract:
Delaware has long attempted to provide business structures that reflect the demands of the business community in an efficient and productive manner. One prime example of this demand/response is the "series" interest available in Delaware limited partnerships, LLCs, and statutory trusts. The series structure combines the flexibility that different types of businesses desire along with the statutory and contractual support that Delaware provides to all of its unincorporated business organizations. Other states have now emulated the Delaware series concept, although there is still considerable confusion as to how a series works. This piece provides an overview of some of the more significant provisions of the Delaware series law. The author concludes that the Delaware series provides a beneficial, efficient use of a combined contractual Delaware entity form with sensible, informed planning.

delaware, business, limited partnership, llc, trusts, series, limited liability company

Abstract:
In re RegO Co. involved the classic conflict between mass products liability claims and corporate dissolution law and the so-called fiduciary duty to creditors. If the duty to creditors is created only at insolvency or dissolution, what principle of corporate law justifies the transformation? Are not contractual and commercial rights and priorities sufficient to safeguard creditors against management decisions which prefer stockholder expectancies at the interval of firm distress or demise? Are not bond-holders, creditors, lenders, and trade suppliers entitled to negotiate such creditor self-protection provisions in indenture and other contractual arrangements with the corporation? Does this fiduciary duty arise from, and is it co-extensive with, the common law contractual duty of good faith and fair dealing or is it is an independent corporate fiduciary obligation occurring at dissolution or insolvency.

fiduciary duty to creditors, insolvency, dissolution

Abstract:
This article considers whether, as a result of recent activity by alternative entities in the public markets, it is appropriate to revise the Delaware General Corporation Law (DGCL) to provide for greater contractual flexibility to shareholders in all Delaware corporations. Such revisions may seek to alter or redefine the duties of directors and officers. Two situations presently call for contractual modification of managerial duties in public corporations: (1) aiding and abetting liability of advisors to exculpated directors, and (2) nonstockholder constituencies of Beneficial Corporations (B Corporations).

corporation law, delaware, business entities, shareholders

Abstract:
This article considers whether, as a result of the recent activity by alternative entities in the public markets, it is appropriate to revise Delaware's General Corporation Law (DGCL) to provide greater contractual flexibility to shareholders in all Delaware corporations to alter or re-define the duties of directors and officers. Two situations presently call for contractual modification of managerial duties in public corporations: (1) aiding and abetting liability of advisors to exculpated directors; and (2) non-stockholder constituencies of B (or "Beneficial") Corporations or other purpose-driven entity.

freedom of contract, modification or elimination of corporate fiduciary duties; B Corporation; aiding and abetting liability; protection for advisors to corporate managers; stakeholders v. stockholders; contractarian theory for 2008; flexibility for "green" or environmental companies; L3C;