Introduction

Introduction

On October 17, 2014, the Delaware Supreme Court held that under the Delaware Uniform Commercial Code, the subjective intent of a secured party is irrelevant in determining the effectiveness of a UCC-3 termination statement if the secured party authorized its filing.[1]  

Background

A recent decision by the Delaware bankruptcy court highlights the issues which must be considered by private equity firms, investment funds and other entities who play an active role in the management of their financially distressed portfolio companies.

When executing public M&A transactions, dealmakers need to understand local market practice as well as the local regulatory environment.

The Bankruptcy Court for the Southern District of New York has held that a cross-affiliate netting provision in an ISDA swap agreement is unenforceable in bankruptcy. In the SIPA proceedings of Lehman Brothers Inc. (LBI), UBS AG (UBS) sought to offset UBS’s obligation to return excess collateral to LBI against claims purportedly owed by LBI to UBS subsidiaries, UBS Securities and UBS Financial Services.

The opinion issued by the Delaware Supreme Court (the “Court”) in the matter of CML V, LLC v. Bax, No. 735, 2010 (Del. Supr. Sept.

The Supreme Court of Delaware recently held that creditors of insolvent Delaware limited liability companies (LLCs) lack standing to bring derivative suits on behalf of the LLCs.

In March 2010, CML V brought both derivative and direct claims against the present and former managers of JetDirect Aviation Holdings LLC in the Court of Chancery after JetDirect defaulted on its loan obligations to CML. The Vice Chancellor dismissed all the claims, finding that, as a creditor, CML lacked standing to bring derivative claims on behalf of JetDirect, and CML appealed.

The Court of Chancery of Delaware ruled that counsel failed to establish "excusable neglect" when it requested additional time to submit an expert witness report after the deadline for that report—as provided for in the court's previously issued scheduling order—had expired.

After a relatively brief and checkered stint in Delaware courts, it appears that the cause of action against corporate directors for “deepening insolvency” may have lost its place in Delaware corporate jurisprudence.