Marla Eskin: Litigation Exposure in Corporate Restructuring
Marla Eskin is a Delaware-based attorney with more than two decades of experience handling complex business disputes and insolvency-related matters. Since joining the Wilmington law firm of Campbell & Levine in 2002, she has built a practice focused on commercial bankruptcy, commercial litigation, and related restructuring issues. Her work includes representing parties in contested bankruptcy proceedings, advising on creditor and stakeholder disputes, and serving as counsel to multiple Section 524(g) Asbestos Settlement Trusts. In addition to her litigation practice, she has acted as a trustee for the Catholic Diocese of Wilmington, Inc. Qualified Settlement Fund. Ms. Eskin’s background in business law and restructuring litigation provides practical insight into the legal risks companies face when navigating financial distress, operational realignment, or transactional restructuring. She also contributes to the legal community as a volunteer mediator for the Justice of the Peace Court, where she handles landlord-tenant matters, bringing a pragmatic and dispute-focused perspective to complex commercial conflicts.
Commercial Litigation Risks During Corporate Restructuring
Companies engage in corporate restructuring to preserve enterprise value during financial distress, realignment, mergers, or operational turnaround. The process exposes companies, directors, investors, and creditors to increased commercial litigation risk. These risks commonly arise from complex transactional relationships, regulatory scrutiny, increased fiduciary obligations, and stakeholder interests. Understanding and managing these litigation risks can help companies effectively restructure efforts without costly disputes.
Creditor disputes and priority challenges are common litigation risks arising from restructuring. When a company intends to modify its debt obligations, disputes may arise over the priority of claims between secured, unsecured, and subordinated creditors. Allegations of unequal or unfair treatment among creditor classes, objections to debt-for-equity swaps, and challenges to valuation assumptions adopted in restructuring plans.
Creditors might sue to protect their economic interests, especially when they believe the restructuring terms violate their contractual rights or the principles of insolvency law. These disputes are widespread in restructuring processes that involve complex capital structures.
When companies restructure, they must negotiate or suspend contractual obligations. The process exposes them to breach-of-contract litigation from stakeholders such as suppliers and vendors, customers and distribution partners, service providers and licensors, and landlords and lessors. Claims often arise from delayed payments, altered services, or agreements terminated or amended without mutual consent. Even when restructuring frameworks provide legal mechanisms for modifying contracts, disputes usually center on force majeure clauses, the interpretation of termination rights, and notice requirements.
Corporate restructuring places directors and officers under heightened scrutiny as financial distress intensifies and stakeholder interests begin to diverge. During this period, fiduciary duties may shift from a primary focus on shareholders toward creditors, increasing the risk of litigation. Claims often allege breaches of fiduciary duty, mismanagement, preferential treatment of certain stakeholders, or continued trading while the company is insolvent. Creditors, shareholders, insolvency practitioners, and regulators may all pursue such actions, exposing directors and officers to potential personal liability if they fail to act prudently, remain adequately informed, or obtain appropriate professional advice.
Transactions executed shortly before or during restructuring also carry significant litigation risk. Courts and creditors may challenge these actions as fraudulent transfers or preferential payments, particularly where transactions appear designed to shield assets, favor specific creditors, or transfer assets at undervalued prices. Insider transactions that lack arm’s-length terms attract especially scrutiny. If a court determines that these actions improperly reduced the asset pool available to creditors, it may unwind the transactions and impose liability on the recipients or company officers who approved them.
Restructuring often affects shareholders and investors, increasing their exposure to litigation. Equity dilution, loss of voting rights, or share cancellations can prompt claims alleging inadequate disclosure, misrepresentation of the company’s financial condition, or unfair expropriation of shareholder value. Public companies face heightened risk in this area, as investors may initiate class actions asserting that management failed to disclose material restructuring developments in a timely and accurate manner, particularly where securities laws impose strict transparency obligations.
Employment and labor-related claims represent another significant source of litigation risk during restructuring. Workforce reductions, benefit changes, and revisions to employment terms can lead to wrongful termination claims, disputes over severance and pension obligations, breaches of collective bargaining agreements, and allegations of unpaid wages or benefits. Failure to comply with labor laws, notice requirements, or contractual protections not only increases legal exposure but can also damage employee morale and corporate reputation at a critical stage of the restructuring process.
About Marla Eskin
Marla Eskin is an attorney with the Wilmington, Delaware law firm of Campbell & Levine, where she has practiced since 2002. Her experience centers on commercial bankruptcy, bankruptcy litigation, and broader commercial litigation matters. She has served as counsel to several Section 524(g) Asbestos Settlement Trusts and as a trustee for the Catholic Diocese of Wilmington, Inc. Qualified Settlement Fund. Ms. Eskin is a Temple University alumna and volunteers as a mediator for the Justice of the Peace Court in landlord-tenant cases. Her professional affiliations include the Delaware Bar Association, the American Bar Association, and the Federal Bar Association.