Quadrant v. Vertin: Delaware Court of Chancery Clarifies Balance Sheet Test for Creditor Standing | Practical Law
In Quadrant Structured Products Co., Ltd. v. Vertin, the Delaware Court of Chancery held, as a matter of first impression, that Delaware law does not require creditors to prove the continuous insolvency of the corporation to maintain standing when bringing a derivative claim against the corporation's directors. Rather, a creditor needs only to establish that the corporation was insolvent at the time the suit was filed and that the creditor still has a debt claim. The Court also held that a creditor does not need to establish irretrievable insolvency of the corporation to file suit.