In the previous blog post, we discussed the ongoing bankruptcy litigation between Crystal Cathedral Ministries and its founder Dr. Robert Schuller over the rejection of his Transition Agreement.  That contract purported to spell out the relationship between the parties as Dr.

Transition for corporate leadership is frequently complex.  When the transition involves a charismatic founder, this step can be even more stressful.  Planning well in advance for the inevitable segue between leaders and outlining the respective roles of both new and departing management can help, but may not fully resolve the issues.  A recent decision involving Crystal Cathedral Ministries, the megachurch founded by famed televangelist Dr. Robert H.

A D&O liability policy protects key individuals in a corporate structure.  These individuals are likely targets for shareholder frustration if an entity is underperforming or suffering from other troubles.  In addition, they may be exposed to personal scrutiny from regulators if the corporation is investigated for any wrongdoing.  As previously discussed in this space, an insurance policy can provide more reliable protection for t

Corporate directors and officers may think indemnification provisions are sufficient to protect them from claims asserted against them by shareholders or regulators.  However, if a director or officer chooses to rely solely on indemnification in bylaws or contracts, and ignores the availability of directors & officers (“D&O”) liability insurance, he or she could be making a significant mistake.  In particular, a D&O policy can offer these individuals more reliable protection in times of financial distress.  When corporations are plagued by regulatory or other lega

When an executive and a company enter into a lucrative severance package, those benefits aren’t necessarily ironclad.

As we covered in this June 2014 post, when a company declares bankruptcy, its trustee can ask the court to allow the company to avoid its executives’ severance rights.

In our last post, we discussed differences between “pay to stay” arrangements, which face stricter scrutiny in bankruptcy cases, and “Produce Value for Pay” plans, which provide incentives for executives based on strong corporate performance.  As promised, we now examine two cases that illustrate acceptable ways for companies to motivate their executives to perform through a Chapter 11 bankruptcy.

At the outset, the answer to the question posed in this article seems simple: employers should just pay their employees as much as is reasonably possible.  However, when a corporation finds itself in Chapter 11 reorganization, the Bankruptcy Code restricts the use of some traditional motivational methods.  Simultaneously, competitors might make tempting job offers to quality employees, inducing them to leave the business.  This combination of factors can distract employees from the main task of getting the debtor through the reorganization process.