As the current economic turmoil leads to an escalation of lawsuits against directors and officers, one expert is warning that a new variety of D&O liability claims may be created related to government bailout efforts.
Kay Wilde, a partner in the Chicago offices of Lovells LLP–an international business legal practice–said banks and companies accepting bailout and Troubled Assets Relief Program (TARP) money could set the stage for D&O claims brought by both the government and shareholders.
The government, Ms. Wilde said, has essentially become a large stakeholder in companies that have accepted bailout or TARP money, and it could choose to file suits against directors and officers if it feels companies are using public money in ways that were not properly disclosed.
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