CORPORATIONS - RIGHTS OF ACTION BY THE REPRESENTATIVE OF CORPORATE CREDITORS - EFFECT OF CORPORATE ASSENT

By various acts the directors and officers of a corporation--its agents for the conduct of corporate business--may wrong the corporation or make possible a wrong to the corporation or to the body of corporate stockholders. When the corporation becomes involved in insolvency proceedings, in order to make available to creditors as many assets as possible, the receiver or trustee in bankruptcy determines whether some cause of action will lie to recover damages or property, or whether he may successfully defend to preserve assets. If the corporation itself could have been successful in the litigation, the solution would be easy because he will have succeeded to the rights and defenses of the corporation. The question whether such receiver or trustee may be successful in litigation becomes acute in a situation where the corporation could not have been successful because corporate assent or some substitute therefore would have barred the corporation. The purpose of this comment is to cast some light on this problem--what are the rights of the representative of creditors where the corporation is barred from pursuing a cause of action because of its assent? The writer will discuss: first, the rights of the representatives of creditors in general; second, the rights of the representative as to various causes of action where there has been corporate assent; and third, what is necessary to effect corporate assent