The Supreme Court of Georgia is considering whether a Georgia law protects the corporate officers and former executives of a Buckhead bank that failed under their watch from personal liability for the bank's losses even if they neglected their corporate duties, the Daily Report reported today. The justices heard oral arguments on Monday because U.S. District Judge Thomas Thrash sought their interpretation of the state's business judgment rule and how it may apply to bank directors and officers in a suit brought by the FDIC against them. The business judgment rule, in general, protects company officers from liability when they make "good faith business decisions in an informed and deliberate manner," according to a 2009 ruling by the Georgia Court of Appeals (Brock Built v. Blake, 300 Ga. App. 816). The presumption behind the rule, according to the appeals court, is that a company's corporate officers have acted on an informed basis, in good faith, and with the belief that any actions they took were in the best interests of the company. As a result, they can't be held personally liable for managerial decisions that turned out badly, caused harm or led to a company's collapse, and the state courts shouldn't second-guess those decisions.
