Kirchner v. KPMG LLP

Summarized by David Banker , Womble Bond Dickinson (US) LLP
15 years 3 months ago

Citation:

(2nd Circuit, Dec 31,1969)

Tag(s):

2nd Circuit

Ruling:

The United States Court of Appeals for the Second Circuit affirmed the judgment of the United States District Court for the Southern District of New York, and ruled that the trustee of a bankrupt corporation’s litigation trust does not have standing to sue third parties who allegedly assisted corporate insiders in defrauding the corporation’s creditors. The court ruled that the trustee lacked standing because the insiders’ misconduct was imputed to the corporation. Based on New York law, the "adverse interest" exception to imputation did not apply.

Procedural context:

Appeal from judgment of the United States District Court for the Southern District of New York (Gerard E. Lynch, then District Judge), dismissing a suit brought by the trustee of a litigation trust against corporate advisers, resulting from a bankruptcy proceeding, in which the trustee alleged misconduct by corporate insiders and advisers.

Facts:

The trustee of a litigation trust brought suit against corporate advisers who allegedly assisted corporate insiders in defrauding the corporation’s creditors.

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