Deepening Insolvency: Developments for Directors
January 2007
Publication| Corporate Transactions| Corporate & Chancery Litigation
Deepening insolvency first appeared as a theory of damages. It rapidly expanded into an independent cause of action that threatened directors and officers of insolvent companies. Then, almost as rapidly, many courts abandoned it. Once seen as a potent plaintiff device for suits against officers and directors,1 deepening insolvency—in the latest stage of its evolution—has faded to a shadow of its former self.