New Decision Affects D&O Liability

A recent federal bankruptcy court decision addresses important principles of fiduciary conduct (and the benefits of a state exculpatory statute) in the context of a financially distressed not-for-profit hospital.

Leveraged transactions, such as leveraged buyouts (LBO) and leveraged recapitalizations, carry the risk of being unwound in a later bankruptcy of the party that transferred assets (including granting liens) or incurred obligations in the transaction. The risk that such transactions may be upset in bankruptcy extends, of course, to selling shareholders in an LBO and to shareholders who receive purchase price funds or dividends in a leveraged recap.

On May 25, 2018, the United States Court of Appeals for the Second Circuit upheld a district court’s decision that Sabine Oil & Gas Corporation could reject certain gathering service agreements in bankruptcy. The agreements, with Nordheim Eagle Ford Gathering, LLC, provided that Nordheim would supply Sabine with certain gathering, transportation and treatment services for Sabine’s natural gas and condensate production.

Mission Product Holdings, Inc. v. Tempnology, LLC, Case No. 16-9016 (1st Cir., Jan. 12, 2018) (Kayatta, J) (Torruella, J, concurring in part, dissenting in part).

ISSUE 3 2017 FOCUS ON Brexit & the US Administration IN International News The Best Option for Dispute Resolution Brexit and the Free Flow of Data What to Expect from Trump’s FTC and DOJ in Terms of Merger Policy 2 International News EDITOR Andrea Hamilton Partner Brussels +32 2 282 35 15 [email protected] PUBLICATION EDITORS Aileen Devlin Kate Hinze CREATIVE SERVICES Jane Hanlon Cali Stefanos TABLE OF CONTENTS 3 Cross Border M&A: The Impact of Brexit, the Trump Ad

Published in the Spring 2017 issue of The Bankers' Statement)

In a continuing effort to alert our lender clients and other friends to developments in the bankruptcy, restructuring, workout and creditors’ rights space, provided below is a summary of recent noteworthy court decisions.

Supreme Court Limits Priority-Skipping Structured Dismissals in Chapter 11

Addressing a circuit split over a trademark licensee’s rights following a debtor/licensor’s bankruptcy, the US Bankruptcy Appellate Panel (BAP) for the First Circuit held that, although trademarks and trade names are not included in bankruptcy law’s definition of “intellectual property,” the licensee’s rights to use the licensor’s trademarks as set forth in the agreement were not terminated by the debtor’s rejection of the agreement. Mission Prod. Holdings, Inc. v. Tempnology LLC, Case No. 15-065 (BAP, 1st Cir., 2016) (Hoffman, J).

If your bank is in the process of a merger or has agreed to buy or sell a portfolio of mortgage loans, notices must be provided to the borrowers before and after the transaction closes. Care must be taken to determine the notices required and how they are worded to avoid violating potentially conflicting laws.

“Top hat plans” have many attractive features, but a new court decision is a reminder that top hat plan participants have limited protections under ERISA – and that assets held in a rabbi trust are not protected from the claims of creditors upon the employer’s bankruptcy or insolvency.

December 2 marks the 15th anniversary of the Enron bankruptcy—a near cataclysmic event that ultimately led to a series of significant legislative, regulatory and public policy developments that inform governance practices to this day. The entire board would be well served by a brief overview of the governance impact of Enron, particularly since many directors were not in board service 15 years ago.