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
Originally published in ABF Journal on May 20, 2015
Determining secured lender cramdown interest rates in Chapter 11 cases has been widely debated, and recent court rulings have proven to be inconclusive. Kaye Scholer Attorneys Madlyn Gleich Primoff and Holly Martin discuss the controversial issue, highlighting the ABI Commission’s recent recommendations that endorse a more favorable approach for secured lenders.
Why Lawyers Need to Pay More Attention to the Distinctions Between Veil-Piercing and Alter-Ego Theories
Two recent decisions of the US District Court for the Southern District of New York may complicate future debt exchange offers. The cases address the validity, under the Trust Indenture Act of 1939, as amended (the Act), of indenture amendments that delete substantive covenant protections in the context of out-of-court debt restructurings. Such amendments are a common feature of debt exchange and cash tender offers and are often essential to achieve a restructuring outside of bankruptcy court.
With the near-historic drop in oil prices, distressed investors are evaluating a myriad of investment opportunities in the oil industry and related fields. One particular area of focus when analyzing these energy-related opportunities are the master limited partnerships that many energy companies utilize in their corporate structure.
Drop in Oil Prices
The House of Representatives passed the Financial Institution Bankruptcy Act of 2014 (H.R. 5421) on December 1, 2014. The bill, if enacted, would add provisions to the U.S. Bankruptcy Code, including a new "subchapter V" of chapter 11, under which "covered financial institutions" would be eligible to be debtors in a chapter 11 bankruptcy case.
Extra Extra Read All About It. It was a cataclysmic weekend in college football for the Big 12 conference. The college football playoff committee elevated the one-loss Ohio State Buckeyes (Big 10) into the fourth and final slot in the inaugural College Football Playoff, taming a one-loss Baylor Bears (Big 12) sloth and a one-loss TCU Horned Frogs (Big 12) colony in the process. Some naysayers may look to the Big 12′s soft schedules and the absence of a league tiebreaker game as drivers of the committee’s decision.
First in a Series of Articles on Bankruptcy Issues
For many investors, business bankruptcy is a mysterious black box that chews up investor and creditor value and then spits out assets or, occasionally, a reorganized operating company. In this series of articles, we are going to open up that box and shed some light on the processes of bankruptcy. After all, you never know what business will file next. It is best to have some understanding of the nature of the game – and to be as well-armed as possible.
If you’re a secured lender, news of a Chapter 11 filing by your borrower can be unsettling. The commencement of a Chapter 11 case triggers an “automatic stay” which, with certain exceptions, operates as an injunction against all actions affecting the debtor or its property.3 Under the automatic stay, a secured lender holding a security interest in the debtor’s property may not repossess or foreclose on that property without the permission of the bankruptcy court.