McDermott Had No Duty to Disclose Mulling Bankruptcy, Judge Says

McDermott International Inc. had no obligation to disclose that the engineering company was contemplating bankruptcy, a Texas federal judge said while recommending that a set of investors’ claims be dismissed.

A company that is close to insolvency should be able to carefully deliberate its future, “free from any obligation to disclose potential bankruptcy,” Magistrate Judge Andrew Edison in the US District Court for the Southern District of Texas said.

“All told, I refuse to fault Defendants for failing to disclose that McDermott was considering bankruptcy,” Edison wrote in a Tuesday decision, which still needs approval from a district court judge. ...