Introduction

Ask any restructuring professional about the greatest challenge in restructuring and reorganising a business group with operations in the People’s Republic of China (PRC), and he/she is likely to say that it is virtually impossible to take over control of the PRC operating subsidiaries without the co-operation of the existing PRC legal representatives.

The liquidator of a company has an obligation to find out what led to the company’s failure, and take steps to maximise recovery for the company’s creditors. He is usually a stranger to the company’s business, and starts off at a disadvantage, having no prior knowledge of the company’s affairs, and usually incomplete and unsatisfactory records. He also has to deal with previous directors and officers of the company who are often uncooperative and may themselves be complicit in the company’s demise.

The Issue and Background

A recent court ruling highlights the need for robust governance practices for nonprofits, particularly those facing financial difficulties.  The Third Circuit Court of Appeals affirmed a jury’s award of $2.25 million in compensatory damages against former directors and officers of a bankrupt nonprofit corporation - personal liability for breach of fiduciary duties and “deepening insolvency.”¹  The court also affirmed punitive damages against the officer defendants, but vacated the award of punitive damages against the director defendants.

On Monday, November 17, 2014, the United States Supreme Court agreed to decide a critical issue for mortgage lenders and secondary market investors, whether Section 506(d) of the Bankruptcy Code allows a Chapter 7 debtor to “strip off” a junior mortgage lien when the outstanding senior debt exceeds the current value of the senior lien.  Bank of America, N.A. v. Caulkett, No. 13-1421, 2014 WL 2207208 (U.S. Nov. 17, 2014); Bank of America, N.A. v. Toledo-Cardona, No. 14-163, 2014 WL 3965212 (U.S. Nov. 17, 2014). 

Contexte

En février 2012, la fermeture des hauts fourneaux de Florange divise la classe politique. Le président François Hollande s’engage alors à ce que désormais tout société voulant mettre fin à son activité en France soit soumise à l’obligation de rechercher un repreneur.

Background

In February 2012, following the highly political closing of the Florange site, a steel production plant, President François Hollande vowed that going forward any company wanting to close down its operations in France would have an obligation to first look for a purchaser.

Given the unfortunate reputation of French courts for awarding substantial damages to employees for unfair terminations, US corporations with operations in France are anxious to limit their financial and legal exposure in case of litigation initiated by their French workforce.  How to achieve this efficiently is a far from rhetorical question as French employees frequently pull in the US parent company as a named defendant.  The recent decision of the French Supreme Court [Cass. Soc.

One of the more effective risk-mitigation legal tools used by  senior real estate lenders is the single purpose entity borrower.  Among other things, having a single purpose, bankruptcy  remote borrower makes avoiding the risks of bankruptcy easier.  Even in bankruptcy, if the borrower is truly single purpose, and it  keeps the universe of creditors small, the senior secured lender  will have an easier time defeating any plan of reorganization  proposed by the borrower because it will control all of the  legitimate classes of creditors by virtue of th

In recent years, bankruptcy courts have come closer to reaching a consensus regarding their ability to recharacterize debt into equity. Yet, beneath this consensus lies a deepening divide that lenders should be aware of. Recharacterization challenges “the assertion of a debt against the bankruptcy estate on the ground that the ‘loaned’ capital was actually an equity investment.” In re Insilco Techs., Inc., 480 F.3d 212, 217 (3d Cir. 2007) (internal citations omitted).