Mark Felger and Barry Klayman, both members of Cozen O’Connor’s Bankruptcy group, discuss a recent case in which a judge came to the conclusion that a knowing violation of the law by a fiduciary is a breach of duty. While this is not a new proposition, his rejection of the argument that the debtor was not harmed by the increase in its liabilities is not typical. This case represents another tool for Chapter 7 trustees seeking to pursue breach of fiduciary duty claims again former controlling owners.
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