Richards Layton & Finger
 

Don't Throw Away Your Deepening Insolvency Materials Just Yet...Damages Under Thabault v. Chait, and Harmonizing Brown Schools with Radnor Holdings and Post-CitX Case Law

August 2009

In the wake of opinions such as the Delaware Court of Chancery's Trenwick America Litigation Trust v. Ernst & Young, L.L.P., the Third Circuit's In re CitX Corp., Inc., and the Delaware Bankruptcy Court's In re Radnor Holdings Corp., many had proclaimed the controversy theory of deepening insolvency to be "dead."  Thus a decision issued in April 2008 by the Delaware Bankruptcy Court, Miller v. McCown De Leeuw & Co. (In re Brown Schools), took many by surprise.  One law firm's bulletin concerning Brown Schools starts with Mark Twain's famous statement, "The reports of my death are greatly exaggerated," while other articles and bulletins concerning the opinion seem to fear that it will breathe new life into a theory that appeared to be dying.