The debtor made claims against a surety that issued a performance bond in connection with a construction contract. The surety contended that it was not liable for the consequential damage claims.
The Court of Chancery of Delaware recently issued a noteworthy decision clarifying fiduciary duties and confirming business judgment rule protection for board-level business strategy decisions by directors of insolvent corporations.1 Quadrant Structured Products Company v. Vertin, 102 A.3d 155 (Del. Ch. 2014).
Ring v. First Niagara Bank, N.A. (In re Sterling United, Inc.), 519 B.R. 586 (Bankr. W.D.N.Y. 2014) –
A chapter 7 trustee sought to recover as preferences payments made by the debtor to a lender and proceeds of collateral liquidation received by the lender based on arguments regarding whether UCC financing statements adequately perfected the lender’s security interests.
It long has been the law that unpaid creditors of an insolvent debtor can complain if the debtor sells or otherwise transfers any of its assets for less than their fair value. Assume, for example, a company in financial distress sells one of its manufacturing plants to an unrelated purchaser for $15 million. If an unpaid creditor of the seller can demonstrate the fair value of the facility at the time of the sale was $20 million, the purchaser may be required to account to the seller, or its creditors, for the $5 million difference.
Corporate directors and officers may think indemnification provisions are sufficient to protect them from claims asserted against them by shareholders or regulators. However, if a director or officer chooses to rely solely on indemnification in bylaws or contracts, and ignores the availability of directors & officers (“D&O”) liability insurance, he or she could be making a significant mistake. In particular, a D&O policy can offer these individuals more reliable protection in times of financial distress. When corporations are plagued by regulatory or other lega
Remember when I wrote a glowing column about a Master Development and Supply Agreement Apple and its lawyers drafted? It was one of the most-read posts I’ve written, so I bet a good number of you do. Since the post was so popular, and since there have been some, well, we’ll say “unanticipated consequences” for Apple, I thought it warranted some follow up.
In Quadrant Structured Products Co. v. Vertin, C.A. No. 6990-VCL, 2014 Del. Ch. LEXIS 193 (Del. Ch. Oct. 1, 2014), the Delaware Court of Chancery held that when creditors of insolvent firms assert derivative claims, they need not meet the contemporaneous ownership requirement applied to stockholder-plaintiffs.
Directors of an insolvent corporation face a host of difficult questions. Should they wind up operations or file for bankruptcy to preserve assets for creditors, or chart a riskier course that could lead the company back to profitability and possibly create value for shareholders? If they choose the riskier course and it fails, will the directors be potentially liable to creditors? The opinion issued by Vice Chancellor Laster of the Delaware Court of Chancery earlier this month in Quadrant Structured Products Co., Ltd. v. Vertin, C.A. No. 6990-VCL, slip op., 2014 Del. Ch.
In re Beltway Law Group, LLP, 514 B.R. 341 (Bankr. D. D.C. 2014) –
A managing partner filed an involuntary chapter 7 petition against a professional limited liability partnership. The bankruptcy court denied the petition and dismissed the case based on its interpretation that the entity was a corporation and not a partnership for purposes of the Bankruptcy Code.
This post comes to you based on a story by the always-excellent Matt Levine of BloombergView. Evidently Apple loaned a company called GT Advanced Technologies a bunch of money so GTAT could develop and supply Apple with sapphire screens for a long time. Anyway, there may have been a default under part of that agreement, and GTAT filed for bankruptcy protection because that default was going to ruin everything (at leas