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Bankruptcy trustee denied claim against directors

Bankruptcy trustee denied claim against directors

Bankruptcy trustee denied claim against directors

A bankruptcy trustee for a charitable organization has failed in her attempt to recover damages from three directors for breach of fiduciary duty. Although a federal District Court denied several defenses by the directors, it ultimately concluded that the trustee had not pled facts sufficient to justify a claim. The Breast Cancer Prevention Fund was founded by James C. Paton, who allegedly benefited improperly from a telemarketing contract that his for-profit company held with the organization. When the organization filed for bankruptcy liquidation, the trustee sued three directors — and their husbands — for breach of duty in failing to investigate and prevent the self-dealing. The parties...

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