[extract] This paper elaborates further why duties to creditors should be of a continuing nature alongside duties owed to shareholders. This viewpoint is advanced for two reasons: (1) Recognition of duties to creditors at the point of insolvency will often be too late as insufficient funds may be available to satisfy claims owed to creditors; and (2) the current state of research does not pinpoint with any degree of confidence an earlier time, prior to insolvency, at which duties to creditors may be said to commence. Such surrogates as have been used to predict the state of a company’s financial health, for example, financial information, statistical prediction techniques, and securities market prices, have proved to be unsatisfactory because of the subjective nature of the evaluation process and the quality of the information on which such evaluation is made.
"The Use of Accounting Models, Statistical Models, and Securities Marketing Prices to Predict Corporate Failure and the Case for Continuing Fiduciary Obligations to Corporate Creditors,"
Bond Law Review:
2, Article 4.
Available at: http://epublications.bond.edu.au/blr/vol3/iss2/4