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In difficult financial times, are duties owed by directors and officers to a corporation's creditors?
Although directors and officers of a corporation continually owe fiduciary duties to the corporation and its shareholders, certain fiduciary duties may be owed to creditors of corporations which have financial problems. When a corporation is insolvent, or on the verge of insolvency, its directors and officers become fiduciaries of the corporate assets for the benefit of the creditors. Thus, a director or officer of a financially troubled corporation must act consistently with the duty of loyalty owed to the company, its shareholders and its creditors.
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