Executive Summary

On December 27, 2018, the United States Bankruptcy Court for the District of Delaware issued an opinion in In re La Paloma Generating Co., Case No. 16-12700 (Bankr. D. Del. Dec. 27, 2018) [Docket No. 1274], that should raise substantial concerns for junior secured creditors.

In particular, the La Paloma opinion determined that:

The Western Cape High Court^[1] has recently passed judgment in a decision which reiterates the bounds of the duties of directors of holding companies to subsidiary companies.  Even though the case involved a damages claim against the liquidators of the holding company (in liquidation), the principle applies equally to directors.