On October 29, 2009, the California Court of Appeal, Sixth Appellate District, issued a decision in Berg & Berg Enterprises, LLC v. Boyle, materially limiting the scope of director duties to creditors of an insolvent or financially distressed California corporation. Dealing with this issue for the first time in California, the Court rejected the precedent established by Delaware courts and declined to impose any special board fiduciary duties to creditors.
Click here to view full memo, Berg & Berg Enterprises, LLC v. Boyle: Outside the Zone -Directors Owe No Special Fiduciary Duties to Creditors of Insolvent or Quasi-Insolvent California Corporations