In an important decision that highlights the liability exposures facing corporate boards for claims alleging breaches of the duty of oversight, a Delaware Court of Chancery Vice Chancellor denied in substantial part the defendants’ motion to dismiss in the shareholder derivative suit pending against the board of Boeing relating to the 737 Max air crashes. The court concluded that the plaintiff had sufficiently alleged that the company’s board had breached its oversight obligations by failing to establish safety oversight mechanisms prior to the October 2018 Lion Air crash and ignoring red flags about safety issues after the Lion Air crash and before the March 2019 Ethiopian Airlines crash. Vice-Chancellor Morgan Zurn’s September 7, 2021 opinion can be found here.
Continue Reading Del. Court Substantially Denies Boeing Duty of Oversight Claim Dismissal Motion

The following guest post takes a look at the role of the Executive Committee of a corporate Board of Directors. This article was written by H. Stephen Grace, President of H.S. Grace & Company, Inc.; Susan Koski-Grafer, Member of the Board of Advisors of Grace & Co.; and S. Lawrence Prendergast, Member of the Board of Advisors of Grace & Co. This article draws on the article authored by these authors in the July 2020 edition of  ABA Business Law Today titled Why a Company Should Consider Using an Executive Committee of Its Board of Directors. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Using an Executive Committee of the Board of Directors

As I have noted in prior posts (most recently here), the current coronavirus outbreak presents corporate boards with a number of challenging issues. In the following guest post, Nick Goldin, Eric Swedenburg and Brad Goldberg of the Simpson Thacher law firm review the considerations that corporate boards should take into account as their companies grapple with the challenges that the pandemic poses. The authors extend their appreciation to Sarah Eichenberger for her substantial contributions to this piece. A version of this article previously was published as a Simpson Thacher client memorandum. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: Considerations for Corporate Directors As Their Companies Confront COVID-19

Francis Kean

One of the questions for companies facing financial difficulties both in the U.S. and in the UK is the extent to which the boards of the companies owe duties to creditors to try to avoid creditors’ losses as the companies approach insolvency. I discussed the state of the law in Delaware regarding these issues in a recent post. In the following guest post, Francis Kean, a partner in the financial lines team at McGill and Partners, takes a look at the recent suspension in the UK of “wrongful trading’ legislation   A version of Francis’s article previously was published on LinkedIn. I would like to thank Francis for allowing me to publish his article as a guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly of you would like to submit a guest post. Here is Francis’s article.
Continue Reading Guest Post: UK’s Wrongful Trading Laws Suspended: Good News for Company Directors?  

The current disruption to normal business operations across the country means that many businesses will soon be under significant financial pressure, if they are not there already. As their companies edge toward insolvency, directors are going to have to make significant decisions about the companies and their operations. Boards may be concerned, as they make critical and difficult decisions, that creditors or others may later attempt to claim that they violated their legal duties.  This concern in turn leads to the question about exactly what duties directors face as their companies approach insolvency.
Continue Reading Cash-Crunched Companies Face Insolvency; Will Directors Face Claims?

A recent judicial ruling out of the U.K. provides an interesting perspective on directors’ duties under applicable law when a bankrupt company is in liquidation. As discussed below, the Court held that a director’s duties continue in relevant respects even if the director’s powers cease as of the date of the bankruptcy filing. The circumstances of the case provide an interesting example of a claim that arose against a former director post-liquidation. As discussed below, the circumstances also provide an illustration of why the purchase of post-liquidation run-off coverage is advisable. Though the circumstances arose under U.K. law, the situation bears enough similarities to what might arise under equivalent U.S. law that the liability and insurance lessons are instructive even in the U.S. context.
Continue Reading Directors’ Duties in Insolvency and the D&O Insurance Implications

Francis Kean

In the following guest post, Francis Kean, Executive Director FINEX Willis Towers Watson, reviews some interesting recent historical academic research on directors’ duties and the business judgment rule in the U.K.  A version of this article previously was published on the Willis Towers Watson Wire blog (here). I would like to thank Francis for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to thig blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article.
Continue Reading Guest Post: The Truth about Directors’ Duties in the UK and the Business Judgment Rule

David Fontaine
John Reed Stark

As I noted in a post at the time, on February 21, 2018, the SEC released its cybersecurity disclosure guidance for publicly traded companies. In the following guest post, David Fontaine, CEO of Kroll, Inc. and its parent, Corporate Risk Holdings, and John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, take a look at the SEC’s guidance, with a particular focus on what the agency’s statement has to say about the duties of corporate directors. A version of this article originally appeared on The Harvard Law School Forum on Corporate Governance and Financial Regulation (Here). I would like to thank David and John for their willingness to allow me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is David and John’s article.
Continue Reading Guest Post: Cybersecurity: The SEC’s Wake-Up Call to Corporate Directors

David M. Furbush
David M. Lisi

Cybersecurity issues are currently at the top of the agenda for corporate boards. In the following guest post, David M. Furbush and David M. Lisi of the Pillsbury law firm review what corporate directors should understand about their companies’ cybersecurity risks and how boards can go about proactively participating in decisions about what to do to mitigate these risks. I would like to thank David and David for their willingness to allow me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is David and David’s guest post.
Continue Reading Guest Post: What Corporate Directors Need to Know about Cybersecurity

Swanson_Joseph
Joseph Swanson
Kirk_Donald
Donald Kirk

An unfortunately frequent part of bankruptcy proceedings is the assertion of claims against the directors and officers of the failed company. In the following guest post, Joseph W. Swanson and Donald R. Kirk of the Carlton Fields law firm take a look at the kinds of claims these officials face, as well as the steps these individuals can take to try to avoid the claims in the first place. I would like to thank Joe and Donald for their willingness to publish their article as a guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Joe and Donald’s article.
Continue Reading Guest Post: Playing the Blame Game: Fiduciary Duty Litigation in Bankruptcy Proceedings