The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others

by Kathy Bazoian Phelps, Jack F. Williams

Overview

Privately, the signs are clear: A company faces financial distress, anxious creditors demand payment, and executives weigh an array of options from restructuring to dissolution. Publicly, however, the company�s daily operations continue: Business deals are made, and investor funds continue to pour in�even though the company�s officers know that the business is failing. Small wonder, then, that �deepening insolvency may be the holy grail of damage liability for plaintiffs seeking to recover losses through litigation,� authors Kathy Bazoian Phelps and Prof. Jack F. Williams note. Where is the legal line that separates company officers� fiduciary duties to maintain the value of the firm from their potential liability to investors? The key lies in the legal principle known as �deepening insolvency,� defined by the Third Circuit (in In re R.F. Lafferty & Co.) as �an injury to the Debtors� corporate property from the fraudulent expansion of corporate debt and prolongation of corporate life.� The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others is written from both the plaintiffs� and defendants� perspectives. It offers a historical analysis of the doctrine, its significance in calculating damages in a variety of liability scenarios, the interplay of the doctrine with fiduciary duties, and potential defenses that may be asserted to deepening insolvency allegations, as well as a state-by-state list of significant case law on this issue. The book will be an invaluable resource for any company executive juggling the competing demands of the troubled firm and its obligations to investors, as well as for litigators practicing on either side of the insolvency aisle.

Product Details

BN ID:	2940016676159
Publisher:	American Bankruptcy Institute
Publication date:	05/29/2013
Sold by:	Barnes & Noble
Format:	eBook
Pages:	200
File size:	586 KB

About the Author

Kathy Bazoian Phelps is a partner in the Los Angeles office of Diamond McCarthy, LLP and has more than 21 years of experience as a lawyer in bankruptcy law and fraud litigation. She represents trustees and receivers, debtors, and secured and unsecured creditors in bankruptcy cases, and she has extensive litigation experience representing both plaintiffs and defendants in a variety of bankruptcy litigation matters. She also represents trustees and receivers, as well as investors, in Ponzi scheme cases. Ms. Phelps has spoken and written widely on a broad range of fraud and bankruptcy-related matters, and co-authored The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes with Hon. Steven W. Rhodes. Ms. Phelps is a member of the FraudNet section of the International Chamber of Commerce�s Commercial Crime Services, which specializes in asset recovery in complex fraud and insolvency matters in overseas jurisdictions. She is also a member of the board of directors of the Los Angeles/Orange County Chapter of the California Receivers Forum, is a board member of the National Association for Equity Receivers and an advisory board member of the Association of Certified Financial Crime Specialists, and is a member of the Financial Lawyers Conference, ABI, the National Association of Bankruptcy Trustees, the Los Angeles Bankruptcy Forum, and the Los Angeles County, Beverly Hills and Armenian Bar Associations. She also serves as editor-in-chief of the Receivership News. Ms. Phelps received her B.A. in international relations from Pomona College and her J.D. from the University of California, Los Angeles in 1991.

Jack F. Williams is a tenured full professor at Georgia State University College of Law and the Middle East Institute in Atlanta, where he teaches and/or conducts research in the areas of bankruptcy and business reorganizations, mergers and acquisitions, commercial law and damages models, corporate finance, financial institutions, fraud and anti-corruption, Islamic banking and finance, taxation, and law and statistics. He is also the scholar in residence of the Association of Insolvency and Restructuring Advisors, and he served as ABI�s inaugural Robert M. Zinman Scholar in Residence in 2001 and again in 2008. Prof. Williams is also a senior managing director at Mesirow Financial Consulting, LLC in Atlanta and New York City. Prof. Williams received his J.D. in 1985 from George Washington University.