Managers' Fiduciary Duties in Financially Distressed Corporations: Chaos in Delaware (And Elsewhere)‪.‬

I. INTRODUCTION The inherent conflict between creditors and shareholders (1) has long occupied courts and commentators interested in corporate governance. (2) Creditors holding fixed claims to the corporation's assets generally prefer corporate decision making that minimizes the risk of firm failure. Shareholders, in contrast, have a greater appetite for risk, because, as residual owners, they reap the rewards of firm success while sharing the risk of loss with creditors. (3)