In several cases since the seminal 2011 Delaware Supreme Court decision CML V LLC v. Bax, which held that creditors of Delaware LLCs lack standing to pursue derivative claims, the U.S. Bankruptcy Court for the District of Delaware has expanded the jurisprudence regarding the assertion of derivative claims and alternative entities. Most recently, in Gavin/Solmonese LLC v.
In response to the increasing prevalence of general partner (GP)-led secondary fund restructurings, the Institutional Limited Partners Association (ILPA) has released guidance regarding this practice. The purpose of this guidance is to promote transparency and efficiency in the secondary process.
The ILPA has defined these restructurings as transactions that offer one of the following:
The first step in determining if a subscription credit facility, often called a capital call facility (a “Subscription Facility”), is a viable option for a private equity or similar investment fund (a “Fund”) is to diligence the limited partnership agreement or other organizational document of the Fund (the “LPA”). Subscription Facility lenders usually require that specific concepts and language be included in an LPA in order to provide a Subscription Facility without additional credit support, such as investor consent letters.
TRANSACTIONAL
LITIGATION/CONTROVERSY
June 8, 2017
Bankruptcy Alert
Insolvency at Its Limits: What Management and Creditors of Insolvent LLCs and LPs Should Know About Fiduciary Duties Waivers and Standing, Inside and Outside of Bankruptcy
By Isley M. Gostin, Craig Goldblatt and George W. Shuster, Jr.
On a motion to “’confirm the trial schedule,’” Vice Chancellor Glasscock determined that actions brought by the limited partners of a partnership based upon the general partner’s alleged fraud, self interest and breach of the partnership agreement were direct claims and therefore not subject to a stay pursuant to the partnership’s bankruptcy proceeding. Sehoy Energy LP et al. v. Haven Real Estate Group, LLC et al., C.A. No. 12387-VCG (Del. Ch.
The current decline in oil prices, which continues to show no signs of a long-term reversal, is having unexpected and unwanted consequences, many of which may turn into long-lasting troubles for the oil and gas industry, especially for its investors.
A recent decision by the Bankruptcy Court for the District of Delaware in PAH Litigation Trust v. Water Street Healthcare Partners L.P. (In re Physiotherapy Holdings, Inc.), Case No. 13-12965 (KG) (Bankr. D. Del. June 20, 2016), may limit the types of transactions that are subject to the “safe harbor” protections of section 546(e) of the Bankruptcy Code.
We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a potential bankruptcy filing.
(6th Cir. June 6, 2016)
The Sixth Circuit affirms the B.A.P. and dismisses the appeal for lack of jurisdiction. Following the principal creditor’s objection, the bankruptcy court denied the trustee and debtors’ motion to approve a settlement of a legal malpractice claim held by the estate. The debtors appealed. The court finds that the appealed order was not a final order that could be appealed because the debtors were free to propose a new settlement for approval. Opinion below.
Judge: Kethledge
Vanquish Properties (UK) Ltd Partnership v Brook Street (UK) Ltd [2016] EWHC 1508 (Ch)
Vanquish, a developer, was a Limited Partnership under the Limited Partnerships Act 1907 with one General Partner, liable for all obligations of the business, and four Limited Partners.
It was granted an overriding lease by the City Corporation in the name of the Limited Partnership, “acting by” its General Partner. There was no mention of the four Limited Partners.