Law, Strategy, and Risk in Commercial Disputes
People who run a company that enters the "zone of insolvency" acquire a new set of duties. Surprise!
Instead of working only for the firm and its owners, they must now answer also to its creditors. And, if they let the outfit keep going when it should shut down to cut losses, they may expose themselves…
May auditors who help a company's officers disguise their cooking of its books avoid liability to the company (now insolvent) by imputing the officers' knowledge of the fraud to the company?
By saying the officers' fraud conferred at least a "peppercorn" of benefit to the company?
The Third Circuit this week held that its previous yes responses must give way to…