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In re Netzel (Bkrtcy. ND Ill.)

Issue: Does corporate creditor have standing under Illinois law to bring a claim against one of its directors for fraud and defalcation in his Ch. 7 case?
The Upshot: As interpreted by the Bankruptcy Court, Illinois law would not confer standing on a corporate creditor to pursue the director of the corporation against which it had a pre-bankruptcy claim based on his “special circumstances” fiduciary duty to preserve the assets of his insolvent company in trust for the benefit of creditors; and the fact that the debtor used corporate funds to pay personal bills and assigned corporate contracts to other companies did not make any difference.

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