Is it time to pull the plug on deepening insolvency?
Abstract: Deepening insolvency refers to the wrongful prolongation of a company’s life, increasing its insolvency and reducing the potential recovery of its creditors and shareholders. Deepening insolvency gained recognition in some courts as an independent cause of action, but several courts have repudiated the doctrine recently. This brief article notes several cases that show that deepening insolvency appears to be on its last legs. Trenwick America Litigation Trust v. Ernst &Young, 906 A.2d 168 (Del. Ch. 2006). Feribach v. Ernst & Young, 493 F.3d 905 (7th Cir. 2007). In re Lemington Home for the Aged, No. 13-2707 (3d Cir. 2/23/15).
Valuation & Litigation Briefing / Litigation & Valuation Report