A recent decision by the Delaware Court of Chancery in Giuliano v. Grenfell-Gardner, et al. involves a notable twist on the familiar Caremark line of oversight liability cases. After the subject company went into bankruptcy, a bankruptcy trustee gained access to the company’s documents and elected to take over derivative claims against directors and officers. In doing so, the trustee pointed to information supporting certain Caremark claims — namely that the board had not imposed adequate reporting systems, and certain officers did not sufficiently inform the board. Beyond the bankruptcy trustee’s unique access to all company documents, the opinion also serves as a useful reminder for corporate directors and officers that the best defense against Caremark claims remains proactive, well-documented, and robust governance practices.
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