Director and Officer Liability in a Volatile Market
Although officers and directors have a fiduciary duty to their companies at all times, the duty changes and is heightened the moment the business enters the “zone of insolvency.” At that point officers and directors cannot act solely in the interest of equity holders – they must also act in the interest of creditors. If officers and directors fail to do so, they may be held personally liable for damages. Importantly, these obligations arise well before the company may actually file for bankruptcy. This program will discuss how to determine when a company enters the zone of insolvency, exactly what that determination means for officers and directors’ fiduciary obligations, how they must act to protect creditors, and best practice for avoiding financial liability.
- How to determine when a company enters the zone of insolvency
- Impact of determination on officers’ and directors’ fiduciary duties
- Practical steps officers and directors should take to protect creditors’ interests
- Potential personal liability for breach of heightened fiduciary duties
- Best practices to avoid personal liability
Speaker:
Peter Tennyson is a partner in the Costa Mesa, California office of Paul, Hastings, Janofsky & Walker, LLP, where his practice focuses on corporate transactional work, including corporate buyouts, mergers and acquisitions and the public and private placement of securities. A major portion of his practice involves the negotiation, structuring and financing of acquisitions and dispositions for privately held companies and private equity funds. He formerly served as vice president and general counsel of Cannon Mills Company and its parent, Pacific Holding Company. He received the California Lawyer “Attorneys of the Year” award for Transactional Work for the year 2003. He received his B.A. from Purdue University and his J.D. from the University of Virginia Law School.
