Exercising Independence In Restructuring: The Path To Better Governance

Arising number of distressed companies are appointing independent directors or managers (Independents) prior to filing for bankruptcy. Independents—who may act as part of special committees—when properly used add governance credibility and may mitigate creditor scrutiny of restructuring-related transactions or settlements. While the use of Independents can aid a process, they can also hinder or delay the restructuring if used improperly. The key is appointing a disinterested person who acts on the advice of appropriate professionals.

Director Fiduciary Duties, Generally

Directors are responsible for managing the company's policies and objectives, overseeing company officers and authorizing significant business decisions. They must act in an informed manner that they reasonably believe is in the best interests of shareholders. See N. Am. Catholic Educ. Programming Found. v. Gheewalla, 930 A.2d 92, 101 (Del. 2007). Under Delaware law, for example, directors owe the