The board’s fiduciary duties are the bedrock of corporate law. Bankruptcy trustees also owe fiduciary duties to the “bankruptcy estate.” But corporations in bankruptcy rarely worry about fiduciary duties, even those corporations in chapter 11 reorganization cases, when the company is supposed to act as if it were the bankruptcy trustee.
At the same time, modern chapter 11 is increasingly seen as “problematic.” Opportunism runs unchecked. This Article argues that these two points are directly connected: the underdevelopment of a corporate debtor’s fiduciary duties enables the abuses seen in modern chapter 11.
I thus use this Article to frame bankruptcy-specific corporate fiduciary duties and then identify several common instances in which the debtor-corporation’s board must act to meet those duties. This Article is the first to analyze the debtor’s fiduciary duties from a perspective that integrates the literature on chapter 11 corporate governance and broader corporate bankruptcy policy considerations. While the articles identifying problems with modern chapter 11 are legion, those offering solutions are rare.