Opinion ID: 782113
Heading Depth: 3
Heading Rank: 3

Heading: Might derivative suits consume judicial resources?

Text: 107 Lastly, amicus Professor Sharfman warns that determining whether a derivative suit should be maintained and, if so, who should maintain it, takes time and effort on the part of the court. The Court in Hartford Underwriters was concerned about this cost, observing that the possibility of multiple [] claimants created by [a]llowing recovery to be sought at the behest of parties other than the trustee could [] impair the ability of the bankruptcy court to coordinate proceedings, as well as the trustee to manage the estate. 530 U.S. at 12-13, 120 S.Ct. 1942. Professor Sharfman points out that in the case at bar, the issue of whether the Committee could pursue a derivative claim consumed significant judicial time and effort that would not have been necessary if creditors lacked derivative standing. We disagree. Rather, we believe that the cost that Sharfman laments arises from uncertainty regarding the propriety of derivative suits, a matter resolved by this appeal. If derivative standing is unambiguously permissible, it is not unduly burdensome to determine whether any particular creditor or committee should have that standing. 108 In general, although we agree that derivative standing does not come without costs, we are satisfied that on the whole it is an immensely valuable tool for bankruptcy courts and creditors alike. It helps to deter fraudulent transfers in the first instance, and it provides courts with a viable remedy when those transfers nonetheless occur. 109