Bankruptcy Litigation

Defense of In Pari Delicto Does Not Affect Trustee Standing

By: Elizabeth L. Anderson

St. John's Law Student

American Bankrutpcy Institute Law Review Staff

 

Rejecting the Second Circuit’s Wagoner

[1]

rule and agreeing with the First, Third, Fifth, and Eleventh Circuits, United States Court of Appeals for the Eighth Circuit held that the collusion of corporate insiders with third parties to injure the corporation does not deprive the corporation’s trustee of standing to sue third parties.

[2]

However, such a situation may give rise to the defense of in pari delicto barring the trustee’s action.

[3]

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