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Feb 16, 2022 · Another two claims by the lender banks are still on foot. The shareholder claim principally relates to a capital raising by Arrium in 2014 and an information memorandum distributed for...
- Courts May Disregard The Distinction Between Direct and Derivative Lawsuits
- Protecting The Interests of Creditors
- Misappropriation and Waste of LLC Assets Is A Derivative Claim
- Derivative Nature of Claims Is An Overlooked Defense
Consider a claim in which a majority refuses to take action against an officer or manager who has misappropriated assets or that is involved with a competing venture. In a closely held corporation, the distinction between direct and derivative disappears. In a company owned by two individuals, half of every dollar lost to the misconduct is lost to ...
The Appellate Division sorted through competing derivative and direct claims in Tully v. Mirz (opinion here), a November 2018 decision involving claims between former shareholders, also brothers in law, who owned half of Interstate Fire Protection, Inc. The business ran into financial difficulties and ultimately defaulted on a loan that the princip...
The Revised Uniform Limited Liability Company Act (RULLCA) as adopted in New Jersey permits the members of an LLC to bring derivative claims. In a March 2019 case brought by investors in the Bensi restaurant chain, Cajoeco, LLC v. Bensi Enterprises, LLC (opinion here) a trial judge in the Law Division of Superior Court dismissed all of the plaintif...
Damages claims that arise out of wrongful conduct committed by owners of a business should always be examined carefully. The first issue, and the one that courts look at directly, is whether allowing a direct recover will damage any creditors or the interests of other shareholders. That is not to say, however, that one should ignore wrongful conduc...
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Feb 12, 2021 · KordaMentha’s amended statement of claim says the liquidator believes Arrium directors traded while insolvent because at the time they incurred the debts, they still had other maturing ...
May 5, 2021 · May 5, 2021 – 10.46am. The insolvent trading action brought against Arrium Group’s board of directors and members of management has reached a settlement. The action was brought by Arrium’s ...
Shareholder Actions: Direct Vs. Derivative Suits. When it comes to protecting their interests – or the interests of the corporation – shareholders have unique rights to take legal action. They can file suit either on behalf of the corporation itself, known as a derivative action, or on their own behalf, called a direct action.
May 14, 2024 · One of the first legal questions that courts ask when reviewing a shareholder suit is whether the pleaded claims are “direct” or “derivative.” However, although the distinction between direct and derivative claims is often outcome-determinative, the specific legal rules governing that distinction have long been flawed, with courts and commentators calling those rules “subjective ...
Jun 30, 2020 · The claim is "derivative" because, again, the cause of action lies with the company; shareholders are able to bring the claim in their own name on behalf of the company. Such claims can be brought either under the statutory mechanism or under the common law; both require permission to be obtained from the court before being allowed to proceed 1.
