Two recent federal court decisions establish that managers of financially troubled Missouri limited liability companies do not owe a fiduciary duty to creditors of their troubled enterprises. Imperial Zinc Corp. v. Engineered Products Industries, L.L.C., No. 4:14-CV-1015-AGF, 2016 WL 812695 (E.D. Mo. Mar. 2, 2016); Imperial Zinc Corp. v. Engineered Products Industries, L.L.C., No. 4:16-CV-551-RWS, 2016 W 6611129 (E.D. Mo. Nov. 9, 2016).
Missouri’s new receivership statute became effective on August 28, 2016. The new statute, called the Missouri Commercial Receivership Act (or “MCRA”) and codified at Chapter 515 of the Missouri Revised Statutes, provides a much more robust receivership remedy than prior law.
Chapter 12 of the Bankruptcy Code, enacted in 1987, provides relief to family farmers facing financial distress. Chapter 12 is available exclusively for family farmers that want to reorganize their financial affairs. While Chapter 12 was very popular in the first few years after its enactment, the number of Chapter 12 cases decreased after the farm economy stabilized. Nevertheless, hundreds of Chapter 12 cases are still filed every year in the United States.
On May 10, 2016, the Missouri General Assembly passed the Missouri Commercial Receivership Act (MCRA), providing for significant changes to Missouri’s law on receiverships. Assuming that Governor Nixon signs the bill (which is almost certain), the law will become effective later this year. The significant changes to the Missouri receivership law in the MCRA are as follows:
Detroit’s historic trip through Bankruptcy Court ended in December 2014 with the confirmation of the City’s Plan of Adjustment, which trimmed $7 billion in debt from the city’s balance sheet and promised improved resident services. At the beginning of the case, no one predicted that the city would emerge from bankruptcy so quickly — only about 18 months — or that the final Plan of Adjustment would enjoy such widespread support among creditors and politicians. What can we learn from the largest municipal bankruptcy ever?
Can you really lease a cow?
According to the Sixth Circuit, the answer is “yes.” Dairy cattle leasing is an increasingly popular method for producers to add to their herds while conserving capital for other purposes. Leasing is particularly attractive for thinly capitalized producers who wish to spread their fixed costs across more cows.
Creditors are generally aware that a debtor may shield from collection by creditors assets that the debtor holds in Individual Retirement Account (IRA). However, as more IRA owners die with substantial assets remaining in their accounts, a new question has arisen: Can a debtor exempt an IRA that she inherited from someone other than her spouse?
What is the legal, political, and financial fallout of Detroit’s highly publicized Chapter 9 bankruptcy? That was the central question in a Nov. 7 panel discussion in St. Louis hosted by Thompson Coburn. Below are the issues discussed by Thompson Coburn attorneys, and leaders from St. Louis’ business and financial communities.
Missouri receivership law should not simply mimic the federal Bankruptcy Code. At least one Court of Appeals has suggested that the federal bankruptcy laws may preempt a state receivership statute that goes too far in creating a collective procedure to distribute assets to creditors.
Note: This post is part of a four-part series on the Credit Report Blog. Click here to view all related posts.