Can You Resign from the Board of a Troubled Company?

Brilliant Article!

CLS Blue Sky Blog

The following post comes to us from David A. Katz, a partner at Wachtell, Lipton, Rosen & Katz, and  Laura A. McIntosh, a consulting attorney for the firm.  The views expressed are the authors’ and do not necessarily represent the views of the partners of Wachtell, Lipton, Rosen & Katz or the firm as a whole.   This article is also being published today in the New York Law Journal.

Two recent Delaware cases involving independent directors of corporations with foreign operations provide a powerful reminder that resigning from the board of directors of a troubled company may not be a simple matter.  In both cases, Delaware chancery court judges denied the director defendants’ motions to dismiss; if the allegations—primarily, that the directors of each company breached their duty of oversight—are proven at trial, the directors potentially could face personal liability.  While nothing about these recent cases indicates a radical…

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