Wisconsin’s Supreme Court 3-3 split in Polsky v. Virnich keeps Wisconsin’s unique view on fiduciary duties owed creditors by closely held corporations in place. In summary, officers and directors do not owe a fiduciary duty to creditors unless the company is BOTH: (a) insolvent; and (b) not a "going concern." Most jurisdictions do not have
Judgment creditors in Wisconsin have the right to a supplemental examination of their judgment debtors to obtain information regarding their collectable assets. This examination may require the debtors to produce records for inspection by the creditor.
In Crown Castle USA, Inc. v. Orion Logistics, LLC, 2009AP3029 (December 7, 2010), an opinion recommended for publication, the Court of Appeals determined that circuits had the authority to require companies related to a judgment debtor to produce records through the supplemental examination process set forth in Chapter 816 of the Wisconsin Statutes. The claim was made that the judgment debtor in that case may have made fraudulent transfers to a company having common ownership to avoid collection of the judgment.Continue Reading Records of Companies Related to Judgment Debtor may be Reviewed by Creditor
What duties do officers and directors of a closely held business owe the company’s creditors when the company is failing? Unfortunately, this has become a common question during these troubling economic times. The answer in Wisconsin appears to be bit different than other states at this point if the failing business is still a “going…