Richards Layton & Finger
 

LLC's Are Different: Creditors of Insolvent LLC's Do Not Have Standing to Sue for Breach of Fiduciary Duty, But Can a Creditors' Committee Be Granted Standing?

April 2011

Almost four years ago, the Delaware Supreme Court held that while creditors of an insolvent Delaware corporation do not have the right to assert direct claims for breach of fiduciary duty against officers and directors, they may obtain derivative standing to enforce the company’s claims. The legal community had almost universally assumed that the law of insolvent limited liability companies was no different.