Personal Liability Risk for Chapter 11 Management: Key Considerations When Deciding Whether to Stay or Resign

This CLE webinar will discuss how to counsel and advise officers and other members of management regarding whether to stay on after a company files Chapter 11 and how to mitigate personal liability. While most CLE programs focus on what incentives the debtor will be allowed to offer existing management to entice them to remain throughout the Chapter 11 case, this program will focus on what risks key employees face if they continue on or if they decide to leave when the business files bankruptcy.

When a company files bankruptcy, it usually wants to keep senior management in place, but doing so carries some increased risk of personal liability despite promised benefits. Whether some or all of management's existing employment terms are enforceable, whether any monies received prior to bankruptcy have to be repaid, and whether promises of post-petition compensation or protection will actually be honored are top of mind for senior management and key employees.

In the past, management's decision may have seemed straightforward, but the prior calculus has to be reexamined in light of Purdue Pharma and other new bankruptcy jurisprudence from the Supreme Court. There are now increased risks and fewer protections for management that continues to operate the debtor post-petition. These individuals need counsel from attorneys well versed in management's obligations to creditors in the lead up to bankruptcy, the availability of D&O coverage, and the increased risk of liability riding through bankruptcy.

Listen as this panel of experienced counsel discusses the issues that counsel to management should consider when advising them on whether to continue with the debtor after Chapter 11 is filed.