Delayed Board Response to Misconduct in Light of Enforcement Dismisses Caremark Claim – Insolvency / Bankruptcy / Restructuring

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United States: Delayed Board Response to Misconduct in Light of Enforcement Counteracts “Caremark” Claim

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Barry Klayman and Mark Felger, writing in the Insider in Delaware Business Court, review a recent decision by Vice Chancellor Slights of the Court of Chancellery dismissing an allegation that the defendants violated their Caremark obligations because the plaintiff failed to adequately plead the futility of the claim. The article highlights the court’s acceptance of the board’s late response to the alleged misconduct so as not to undermine the company’s defense of pending enforcement actions related to the same conduct.

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