Environmental Liability of Dissolved Corporations in Delaware is Forever

Ever since the Supreme Court’s decision in Citizen’s United, an effort has been made to humanize corporations, culminating in Mitt Romney’s infamous pronouncement that “Corporations are people my friend.”  Now it turns out that corporations may not be entirely like people.  In a recent decision, the Delaware Court of Chancery in In the Matter of Krafft-Murphy Company, Inc. ruled that corporations are in at least one respect immortal in that their liability to third parties lives forever. 

In Krafft-Murphy, asbestos claimants sought to reach the unexhausted liability insurance of a dissolved corporation long after the expiration of the Delaware three year wind-down period.  The corporation, defended by its liability insurers, appeared for the purpose of establishing that it was indeed dead and could not respond to new claims.  Although the trial court agreed that a dissolved corporation was dead to new claims, the Court of Chancery reversed.  Despite acknowledging that the corporation had been dissolved, the court went on to say that there was no statute of limitations in Delaware that extinguished the corporation’s liability – which apparently will continue forever.  Upon the appointment of a receiver, the dissolved corporation could be resurrected for the limited purpose of responding to the suit and potentially distributing the proceeds of the corporation’s  insurance if the claimants in the suit prevail.  

Given that many corporations are organized under Delaware law, the Krafft-Murphy decision may provide a route to gain access to the insurance of long-dissolved corporations.

 

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Environmental Law | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×
×