Section 72 Director and Officer Liability (New Section)

• Library: Business Transitions 2009 Supp

As uncertainty continues and chaos seems to reign periodically in the business and finance arena, litigation will also increase. The underlying legal theories will be many, but the primary targets will likely be those who are the “decision-makers” and those who have the “deep pockets.”

The decision-makers will be primarily the officers and directors, but the deep pockets will include not only the officers and directors but also their lenders, attorneys, financial advisors, and accountants and all parties’ insurers.

Most economic losses of the type recently sustained are presumably caused by the combination of industry- or company-specific problems, major market shifts, general or localized economic downturns, and possibly fraud, which are compounded by the failure or inability of the decision-makers and others to predict—or in the case of fraud, detect—and prevent the resulting damage to their companies.

The responsibilities assumed by these participants in the transaction due diligence...