In these difficult economic times, companies seeking additional liquidity may turn to alternative sources of financing. Companies with assets that can be monetized (e.g., accounts receivable, intellectual property, real estate, equipment, etc.) may discover a number of options available to them. In particular, accounts receivable financing may be an attractive way for certain companies to obtain working capital relatively quickly.

The Delaware Court of Chancery recently issued an opinion in Quadrant Structured Products Company¹that addresses creditors’ rights to bring derivative lawsuits against directors and officers of a corporation.  The Court held that Delaware law does not impose a continuous insolvency requirement and that the “traditional balance sheet test” is the appropriate test for determining solvency.  The opinion also provides a roadmap on the current landscape under Delaware law for analyzing breach of fiduciary duty claims. 

The senior secured note holders recently lost their appeal of the bankruptcy court's decision confirming Momentive's chapter 11 plan.¹