Mukamal v. Bakes, (S.D.Fla.)

Claims - Allegations in trustee's complaint were insufficient to state claim on deepening insolvency theory.

Allegations in a complaint filed by the trustee of a liquidation trust, regarding misconduct of directors of corporate Chapter 11 debtors during their slide into bankruptcy in purportedly "propping" the debtors up, by misrepresenting their fiscal health, in an attempt to allow their business to be sold at a high enough price to generate a return for original investors, were insufficient to state a breach of fiduciary duty claim under Delaware law, absent any allegation that the original investors were being preferred at the expense of minority shareholders or that the directors' conduct was not aimed at benefiting all shareholders. Under Delaware law, the mere act by a corporate fiduciary of causing the corporation to incur additional debt in the face of insolvency does not alone establish bad faith or disloyalty, if the purpose was to maximize the value of the corporation as to all shareholders.