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Director Liability: Wellspring Ruling, Director Releases, Duty of Loyalty During Restructuring

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, May 5, 2022

Recorded event now available

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This CLE course will examine the most significant recent Delaware court decisions impacting director and officer liability. The panel will discuss issues of director releases and the duty of loyalty of directors, particularly during restructuring periods. The panel will also address best practices for companies and directors when facing future liability claims.


The Delaware courts reached a decision in 2021 that veers from the most recent guidance on how Caremark is being interpreted. The decision in Wellspring is a cautionary tale for the fiduciaries of a distressed or potentially distressed corporation, particularly with respect to negotiations around release and/or indemnification provisions for those same fiduciaries.

Corporate counsel will need to advise directors and officers on how their activities may be evaluated against their duty of loyalty to the company. The decision in Wellspring is an important reminder for directors and officers as to how both process and substance matter in restructuring negotiations. Particularly where negotiations may involve releases, indemnification, or similar provisions, counsel must be conscious of the ever-present tendency for counterparties to exercise "20/20 hindsight." Wellspring reinforces the importance of disinterested governance and arm's length dealing with the restructuring process.

As to the need for independent directors, the company at issue had disinterested governance. The Wellspring decision is neither unique nor unusual. Corporate counsel will need to know how to engage with their clients and advise on negotiating any number of transaction alternatives and terms. But Wellspring may establish a precedent that undermines the ability to negotiate for what is customary and, indeed, necessary protections for corporate decisionmakers in those same transactions, such as releases, indemnity, or exculpation.

Listen as our expert panel discusses how corporate decisionmakers face choosing a path where outcomes are at best uncertain and how Wellspring and its evolution from Caremark guides how directors and officers need to comply with the duty of loyalty. The panel will address how Wellspring can help establish best practices for all corporate stakeholders regarding releases and anticipate future expectations and scrutiny of director and officer conduct.



  1. History of director liability
    1. Caremark decision
  2. Wellspring decision
    1. Director releases
    2. Duty of loyalty
  3. Best practices


The panel will address these and other key topics:

  • How was the decision in Wellspring a departure from Caremark?
  • How can companies incorporate disinterested governance and directors when negotiations conflict with a duty of loyalty?
  • When can directors seek release from liability without violating a duty of loyalty?
  • What does the decision in Wellspring mean for the future evaluation of director conduct?


Feltman, James
James Feltman

Managing Director

Mr. Feltman is a managing director in the Restructuring Advisory practice. His practice is focused on providing...  |  Read More

Primoff, Madlyn
Madlyn G. Primoff

Freshfields Bruckhaus Deringer

Ms. Primoff has more than 25 years of experience representing companies, lending groups, syndicate agents,  global...  |  Read More

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