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Officers of Selling Companies May Escape Fiduciary Duty Liability But May Be Required to Return Change of Control Payments if Company is Insolvent Post-Closing (Nine West Part 2)

While there has been much fuss over the recent ruling by the United States District Court for the Southern District of New York in In re Nine West LBO Securities Litigation1 due to its potential ramifications for director liability, as we explored in Part I of our series on this case here, court watchers have paid less attention to the court’s treatment of officer liability and the interes

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Private equity, Due diligence
The WHOA in operation: first court orders regarding the Dutch scheme published

The Act providing for court confirmation of a private restructuring plan (Wet homologatie onderhands akkoord (WHOA)) entered into force on 1 January 2021. It introduces a fast and efficient pre-insolvency procedure to restructure a company’s business through a scheme between the company and its creditors and/or shareholders, with the possibility of a court-approved cross-class cram down.

Netherlands, Insolvency & Restructuring, Freshfields Bruckhaus Deringer
Attention Buyers of Assets in Bankruptcy: How To Be A Good Faith Purchaser and Ensure Any Post-Closing Challenges Will Be Dismissed as Statutorily Moot Under Section 363(m) of the Bankruptcy Code

Introduction

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP
Warning to Directors of Selling Companies: Breach of Fiduciary Duty Liability May Exist for Failure to Investigate and Ensure Solvency of Company Post-Closing and Propriety and Effect of All Related Transactions (But You Can Protect Yourself)

A recent ruling from the United States District Court for the Southern District of New York sent shock waves through the legal and financial community, with some shouting that this “could be a gamestopper for the private equity business.”1 Although the ruling in In re Nine West LBO Securities Litigation2 breaks new ground and arguably narrows the protections available to directors under the normally-broad business judgment rule, there are clear lessons others can take from this saga to prevent a similar fate.

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Private equity, Due diligence
Yeah, We Can Take It - Texas Bankruptcy Court Defines the Scope of Its Post-Confirmation Jurisdiction

Executive Summary

A recent decision from the United States Bankruptcy Court for the Northern District of Texas, In re Care Ctrs., LLC, No. 18-33967, 2020 Bankr. LEXIS 3205 (Bankr. N.D. Tex. Nov. 12, 2020), examined (1) the scope of bankruptcy court subject-matter jurisdiction for post-confirmation actions filed in state court and removed to bankruptcy court; and (2) when the court must or should abstain and remand a proceeding back to the court where the action was originally brought.

USA, Texas, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP
Eastern District of Virginia Bankruptcy Court Finds Landlord’s Lender Has No Right to Enforce Landlord’s Lease with Bankrupt Retailer

OVERVIEW

USA, Insolvency & Restructuring, Litigation, Real Estate, Weil Gotshal & Manges LLP, Coronavirus
"Dutch scheme" adopted by Parliament

On Tuesday 6 October 2020 the Dutch Senate adopted the long-awaited legislative proposal for the Act providing for court confirmation of a private restructuring plan (Wet homologatie onderhands akkoord (“WHOA”)). The act introducing the 'Dutch scheme' will enter into force in the beginning of next year at the latest.

Netherlands, Insolvency & Restructuring, Litigation, Freshfields Bruckhaus Deringer
Third Circuit Decision Provides New Guidance on the Unfair Discrimination Standard of Cramdown and the Enforcement of Subordination Agreements When Confirming Cramdown Plans

In an important decision issued at the end of August, the United States Court of Appeals for the Third Circuit, in In re Tribune Co., Case No. 18-2909 (3d Cir. Aug. 26, 2020), held that subordination agreements need not be strictly enforced when confirming a chapter 11 plan pursuant to the Bankruptcy Code’s cramdown provision in section 1129(b)(1). In its decision, the Third Circuit also encouraged bankruptcy courts to apply “a more flexible unfair-discrimination standard” and set forth eight guiding principles to aid in that effort.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Title 11 of the US Code
Parliament adopts Dutch ‘Chapter 11’ law: major step towards a business rescue regime in Europe

On 26 May 2020, the Dutch Lower House adopted the long-awaited legislative proposal regarding the Dutch scheme (Wet Homologatie Onderhandsakkoord (WHOA)).

This is an important step towards the entry into force of the proposal. The Senate still needs to approve, but this can usually be done much quicker and less debate is expected.

The Senate will discuss the procedure of the treatment on 2 June 2020. Once the Senate has voted and it becomes clear when the WHOA comes into force, we will post a new update.

European Union, Netherlands, Insolvency & Restructuring, Freshfields Bruckhaus Deringer
Fraudulent Transfer Claims Avoid State Sovereign Immunity, But Only If a Property Interest Exists Under State Law

In a recent decision, In re Philadelphia Entertainment and Development Partners, L.P., No. 14-000255-mdc (Bankr. E.D. Pa. Dec. 31, 2019), the Bankruptcy Court for the Eastern District of Pennsylvania held that state sovereign immunity does not prevent bankruptcy courts from hearing fraudulent transfer claims against states.

USA, Pennsylvania, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Debtor