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
Shareholders of financially troubled S corporations may now be able to avoid the flow-through of taxes when the S corporation or its subsidiary files bankruptcy. In In re Majestic Star Casino, LLC, 716 F.3d 736 (3rd Cir. 2013), the Third Circuit Court of Appeals ruled that an S corporation shareholder, who may have received the benefit of years of flow-through income tax treatment from the S corporation, may avoid the flow-through of taxable gain or income in bankruptcy simply by revoking the S corporation election.
Fourteen former MF Global executives, including Jon Corzine, the former chairman and chief executive officer, are entitled to access most of a US $200 million directors and officers liability insurance policy purchased by MF Global Holdings prior to the firm filing for bankruptcy in October 2011, under the decision of a US bankruptcy court in NYC last week. The executives had previously made a motion to access the insurance.
Bankruptcy Remote? Maybe Not
A recent pair of opinions from New York and Pennsylvania shows the importance of evaluating all parts of director and officer (D&O) insurance coverage, down to each definition. These cases, one holding for the insured and one for the insurer, demonstrate that a policy’s terms can be absolutely critical if the insured seeks indemnification for defense costs.
On June 20, 2014, the Texas Supreme Court issued its opinion in Ritchie v. Rupe, 2014 Tex. LEXIS 500 (Tex. 2014). In Ritchie, a minority shareholder in a closely held corporation attempted to force the majority shareholders to buy-out the minority shareholder’s interest in the corporation by bringing a claim of shareholder oppression under § 11.404 of the Texas Business Organizations Code (TBOC), the Texas receivership statute.