As a director, do I owe a duty to the corporation’s creditors?

As a director, your fiduciary duties to act with due care and loyalty towards “the corporation and its shareholders” are specified by statute. See Cal. Corp. Code § 309. The statute says nothing about owing any duty to the corporation’s creditors. Creditors have argued that when a corporation enters an ill-defined “zone of insolvency”—that is, the corporation is not yet insolvent, but is almost there—directors should have a duty to protect the corporation’s remaining assets for the benefit of its creditors. But California courts have rejected such a broad fiduciary duty that directors would owe to the corporation’s creditors solely because the corporation is in the vicinity of insolvency. Instead, the courts have recognized only a limited duty to avoid actions that divert, dissipate, or unduly risk corporate assets that might otherwise be used to pay creditors’ claims. Such actions include self-dealing or the preferential treatment of some creditors at the expense of others. Except in that very limited circumstance, you do not owe a duty to the corporation’s creditors.