AS THE “New Economy” bubble bursts and a fresh batch of high-profile corporations are forced to seek bankruptcy protection, increased scrutiny is brought to bear on debtor corporations by everyone from investors and creditors to the media and government agencies charged with monitoring corporate practices. When corporate irregularities are revealed, a bankruptcy trustee is often appointed, vested with statutory authority to pursue those causes of action belonging to the debtor corporation’s bankruptcy estate against third parties.[1]�
In this context, accountants, lawyers and bankers – the failed corporation’s professionals – often become defendants charged with torts ranging from negligence, aiding and abetting breach of fiduciary duty and fraud stemming from their perceived role in failing to reveal and even facilitating the corporation’s wrongdoing. Because the trustee’s statutory role is to prosecute such actions on behalf of the debtor’s estate, the trustee’s success in recovering damages translates into increased distributions for each of the debtor’s creditors, who generally share in the estate on an equal, pro rata basis.
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