Leverage Does Not Equal Liability: A Legal Caution

Added: 2026-06-02

[00:00:00]A company loads up on debt, then collapses.

[00:00:05]So, is the deal automatically wrongful?

[00:00:09]No, that is the trap.

[00:00:14]Courts don't just ask, "Did the company fail later?" They rewind to the moment the debt was used.

[00:00:24]In Kapetansky, the sellers weren't liable just because the buyer used leverage. The company was healthy. The sellers weren't shown to know the harmful structure. In VFB, Campbell won because the spun-off company was solvent, and market evidence beat hindsight.

[00:00:41]The real questions are sharper. Who got the value? Who took the debt? Was the company solvent? Were creditors unfairly exposed?

[00:00:52]Leverage alone isn't a legal sin, but leverage plus bad facts is litigation risk. Tap the related video for the full breakdown of Kapetansky, VFB, and why courts hate hindsight.