Legal Question in Business Law in California

Re: Corporate law

Yes, they can be sued, but only if you have proof they committed willful misconduct or fraud on the company and shareholders. Just because they made unwise decisions is a big 'so what'.

Re: Corporate law

Look, this question is more in depth that I can discuss in this forum, but you may call me. I do corporate litigation. Officers can be sued in derivative or direct suits for things like breach of fiduciary duty and others. I would hurry. Let me know if you want my help.

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Re: Corporate law

First, the answer to the question as asked has to be "yes." However, I'm sure you also want to know whether such suits can be successful, and in what situations is success possible or likely.

The answer there is that it is much more difficult to sue and recover any damages when the target defendants are executive officers of a benkrupt corporation. A derivative lawsuit, which requires that the plaintiff be a shareholder (and not just an employee, which I'd guess is what you are or were), is unlikely to go anywhere after the corporation is in the hands of a trustee.

Further, if the allegation is going to be "mismanagement," a vague and general concept, it would be essential to find and prove specific instances of so-called mismanagement, and also to show that the plaintiff has standing to sue. Managers, including directors, are given quite a bit of discretion to manage as they see fit under the "business judgment rule," and are generally not personally liable for a bad result if they have exercised a certain amount of caution and diligence, but things did not work out as hoped.

As to the standing to sue issue, it is not usually going to be sufficient that an employee lost his job, or his pension, to be able to sue the top dogs of a bankrupt company. Shareholder, maybe; but it would take artful pleading and unusual facts for someone to whom the officers or directors did not owe a special duty to be allowed to maintain a direct action against the officers and/or directors.

I too would be willing to look at some specifics and give you a personal off-site evaluation of your proposed action. Maybe there is a small window of opportunity, but between the bankruptcy, the corporate shield, and the standing-to-sue problem, I think the chances for a successful suit are pretty slim.