News and Insights
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New Guidance for Directors and Officers Issued by Third Circuit Court of Appeals
A recent decision by a federal appellate court provides a stark reminder that liability can extend to directors and officers of both for-profit and non-profit entities for failing to observe fiduciary duties. In Official Comm. Of Unsecured Creditors ex rel. Lemington Home for the Aged v. Baldwin (In re Lemington), No. 13-2707, 2015 WL 305505 (3rd Cir. 2015), the Third Circuit Court of Appeal found directors and officers individually responsible for mismanagement that rose to the level of a breach of fiduciary duties that were owed to the creditors when the organization became insolvent. This article briefly reviews the opinion and provides key action items for directors and officers to consider as they walk into their next meeting.