Which of the following statements about the zone of insolvency is NOT true?

Question

Quizplus · Accepted Answer

While the scope of the duty owed to creditors and the definition of insolvency may vary by jurisdiction, there is a widely recognized concept of the zone of insolvency. However, creditors do not have a right to assert direct claims for breach of fiduciary duty against a firm's board of directors in the zone of insolvency. This is a common misconception, as the board's duty in the zone of insolvency is primarily to preserve the value of the firm for the benefit of all stakeholders, not just creditors.

Which of the Following Statements About the Zone of Insolvency