Singapore’s new restrictions on ipso facto clauses are welcome news to the local restructuring community, and a strong step towards establishing it as one of the region’s premier restructuring hubs. But how will these restrictions affect innocent counterparties and existing commercial contracts, ask partner Guan Feng Chen and associate Jonathan Tang at Morgan Lewis Stamford?
New restrictions on ipso facto clauses
On November 23, 2018, the German Federal Council (Bundesrat) approved the Tax Reform Act of 2018 (the “Tax Reform Act”; Gesetz zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften), which was passed by the German Parliament (Bundestag) on November 8, 2018.
On November 23, 2018 the German Federal Council (Bundesrat) approved the Tax Reform Act of 2018 (the “Tax Reform Act”; Gesetz zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften), which was passed by the German Parliament (Bundestag) on November 8, 2018.
Avago Technologies Wireless (USA) Manufacturing Inc. acquired PLX Technologies, Inc. for $6.50 per share in cash. After the $300 million merger closed, certain former PLX stockholders sued for damages, alleging that the PLX directors had breached their fiduciary breaches, aided and abetted by both Potomac Capital Partners II, L.P. (a hedge fund that is an activist stockholder and had three designees on the PLX board) and the PLX board’s financial advisor (the “Banker”).
Credit agreements by their terms commonly bar the borrower from seeking punitive, indirect, special or consequential damages for a breach of the agreement by lenders and their affiliates. The clauses, as enforced, prevent a borrower from obtaining damages for harm that may be suffered by the borrower's business if the lender wrongfully declines to fund. The clauses prevent lenders from exposure to open-ended damages claims if the lenders refuse to lend to a borrower, including damages that are the direct and indirect result of the failure to lend.
Introduction – Distressed Issuers and Borrowers
Kai Zeng and Kon M Asimacopoulos, Kirkland & Ellis
This is an extract from the first edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
The purpose and role of ad hoc committees from a debtor’s perspective: the initial phase
Yushan Ng and Helen Ward, Cadwalader Wickersham & Taft
This is an extract from the first edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Chris Howard, Sullivan & Cromwell
This is an extract from the first edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
The relationship of an ad hoc committee with its stakeholder constituency
No power to bind: the importance of the underlying finance documents in relation to decision making
Nick Angel, Peter Newman and Edward Rasp, Milbank LLP
This is an extract from the first edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Role and powers