Directors' Duties in Failing Firms

Larry Ribstein at Ideoblog has written (together with coauthor Kelli Alces) an important new paper concerning the fiduciary duties of directors of failing firms. Conventional wisdom (as often stated in law review articles and judicial dicta) is that director fiduciary duties, though generally owed to shareholders, shift from shareholders to creditors when the firm nears or enters insolvency. Ribstein and Alces, however, argue persuasively against this view.