Heightened Judicial Scrutiny Faces Directors Designated by Corporate Creditors

May 7, 2010Articles Bank Director
The pressure on U.S. financial institutions to reform past practices will continue unabated for the foreseeable future. In this new “normal” environment, investors, creditors, and other corporate stakeholders who have suffered financial losses are likely to attempt to hold directors accountable. This could very well take the form of litigation, with claims alleging that directors ignored warning signals, took undue risks, or engaged in reckless behavior. If any form of director self-dealing or conflict of interest is implicated, the risk to corporate decision makers is greatly enhanced. Directors, officers, and their advisers need to be proactive in heading off the potential for these issues to occur.