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Directors of Nonprofit Held Financially Liable for Relying on Incompetent Officers and Lack of Oversight

In a striking decision earlier this year, the 3rd Circuit Court of Appeals affirmed a jury’s findings of liability for breach of fiduciary duties and ‘deepening insolvency,’ and the award of $2.25 million in compensatory...more

Federal Appellate Court Ruling Sounds the Liability Alarm for Officers and Directors of Struggling Health Care Providers – Both...

Last month, the United States Court of Appeals for the Third Circuit issued an important, 28-page opinion that confirmed a jury verdict, holding former officers and directors of a not-for-profit health care provider in...more

A novel question of duty – Philip Davison Sebry v Companies House and The Registrar of Companies

The Claimant, Philip Sebry, formerly Managing Director of Taylor & Sons Limited (‘Company’), brought a claim for damages for negligence and breach of statutory duty against Companies House and the Registrar of Companies...more

How Recent Fiduciary Duty Cases Affect Advice To Directors And Officers Of Delaware And Texas Corporations

The conduct of corporate directors and officers is subject to particular scrutiny in the context of business combinations (whether friendly or hostile), executive compensation and other affiliated party transactions,...more

"Delaware Court of Chancery Decision Clarifies Fiduciary Issues in Insolvent Company Context"

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...more

The Seemingly Interminable Garlock Saga: Where Are We Now?

As reported in our February 2014 edition, the bankruptcy court estimating Garlock Sealing Technologies, LLC’s asbestos liability uncovered significant evidence “that the last 10 years of its participation in the tort system...more

HAMP and Section 75-1.1, Part 2

In yesterday’s post, we discussed when a lender’s failure to comply with guidelines under the federal Home Affordable Mortgage Program (HAMP) might violate N.C. Gen. Stat. § 75-1.1 as well. We analyzed a very recent federal...more

Credit Crunch Digest - November 2014

This issue of the Credit Crunch Digest focuses on recent forex settlement agreements; rate-swapping claims in a Libor consolidated action; Bank of Tokyo’s $315 million settlement with the New York Department of Financial...more

Bankruptcy Bleak House—The Limited Ability of Bankruptcy Courts to Enter Final Judgments

In Stern V. Marshall, ____ U.S ___, 131 S. Ct. 2594 (2011), the Supreme Court held that bankruptcy courts cannot issue final judgments on state law counterclaims even though they are “core proceeding”. Stern V. Marshall is...more

Limits of Expansive Protection of New York’s In Pari Delicto Defense

Whenever a company tumbles into bankruptcy following the discovery of its management’s financial misdeeds, firms that provided the company with accounting, legal, banking and financial advisory services should prepare to...more

LLC Managers Beware: Get Involved With Member Distributions By an Insolvent LLC and You May Be Personally Liable

A chapter 7 trustee sued a manager of three limited liability company (LLC) debtors for breach of fiduciary duty and to hold the manager personally liable for distributions made to members, including himself....more

MN Supreme Court: Creditors May Void Fraudulent Transfers of Assets in Uncontested Divorces

On July 9, 2014, in Citizens State Bank Norwood Young America v. Gordon Brown, et al., the Minnesota Supreme Court held that Minnesota's Uniform Fraudulent Transfer Act ("MUFTA") may be applied to transfers of assets made as...more

Tronox Inc. v. Anadarko Petroleum Corp. (In re Tronox Inc.) – Bankruptcy Court Takes Unusual Steps to Declare Corporate...

Companies that have valuable assets but also face significant liabilities will sometimes engage in restructurings to isolate, or “ring-fence,” the good assets from the liabilities. Often the companies are able to accomplish...more

Bankruptcy Beat: Bankruptcy Court Applies To Collateral Estoppel To State Court Judgement For Fraud and Vexatious Litigation In...

In her first published decision, rendered in Mexico Construction and Paving v. Thompson (In re Thompson), Case No. 11-32924, Adv. Pro. No. 12-03065 (Bankr. D. Conn May 22, 2014), Judge Julie A. Manning held on the basis of...more

Clawback Suit Targets International Investors

In 2008, a few months before the $65 billion Madoff Ponzi scheme fell apart, the $3.65 billion Petters Ponzi scheme made headlines. Tom Petters told investors that they were financing the purchase and sale of consumer...more

SEC Obtains Freeze Order Against Recidivist And His Entities

The Commission brought an action against a securities law recidivist and his entities who had raised about $22 million in a fraudulent investment scheme. When the action was filed a temporary freeze order was obtained. Later...more

The U.S. Supreme Court Clarifies the Procedure for Unconstitutional “Core” Matters Under Stern v. Marshall in Executive Benefits...

In 2011, the U.S. Supreme Court decided Stern v. Marshall, 131 S.Ct. 2594. In Stern, the Court was faced with the question of whether the Bankruptcy Court had statutory and Constitutional authority to decide a counterclaim...more

Ruling Explains and Extends Application of Good Faith Defense to Fraudulent Transfer Actions in SIPA Context

In an April 27, 2014 decision in the Madoff cases, Judge Jed S. Rakoff ruled that the standard of good faith should be considered differently in a Securities Investor Protection Act (SIPA) liquidation. To defeat a good faith...more

U.S. Supreme Court Clarifies Bankruptcy Court Jurisdiction but Leaves Some Questions Unanswered in Executive Benefits Insurance...

The Supreme Court issued its decision in the closely followed case of Executive Benefits Insurance Agency v. Arkison, Chapter 7 Trustee of Estate of Bellingham Insurance Agency, Inc., 573 U.S. ___ (2014) (Bellingham) this...more

Garlock Court Grants Access to Sealed Documents Demonstrating a Widespread Pattern of Manipulation of Exposure Evidence

Ford Motor Company recently obtained access to previously sealed testimony and exhibits that formed the basis for a bankruptcy court’s January 10, 2014 Order finding a widespread pattern of demonstrable misrepresentation by...more

Supreme Court Upholds Limited Bankruptcy Court Jurisdiction Over Defendants in Fraudulent Transfer Actions; Leaves an Open Door to...

On June 9, 2014, the Supreme Court issued a decision in Executive Benefits Insurance Agency v. Arkison, a case that tested the extent of the jurisdiction of bankruptcy court judges to decide fraudulent transfer and certain...more

Supreme Court Decides Executive Benefits Insurance Agency v. Arkison

In Executive Benefits Ins. Agency v. Arkison, No. 12-1200, the Supreme Court ruled that when Article III does not permit a bankruptcy court to enter final judgment on a core bankruptcy claim, the bankruptcy court may issue...more

Delaware Bankruptcy Court Denies Derivative Standing to Creditor Seeking Recharacterization

In that case, Walnut Creek Mining Company (“Walnut Creek”), the debtor Optim Energy’s largest unsecured creditor, sought standing to pursue recharacterization, equitable subordination, and fiduciary duty claims on behalf of...more

Does the Business Judgment Rule Protect Bank Officers and Directors?

When a corporation suffers significant losses, or ultimately fails, frustrated shareholders, creditors, or others often try to sue the corporation and/or its officers and directors for losses caused by mismanagement of the...more

Bankruptcy Court Shields Equity Sponsors Serving as Secured Lenders from Individual Creditor Seeking to Litigate Subordination and...

In a recent case — In re Optim Energy, LLC — the Delaware Bankruptcy Court denied an individual creditor’s request to pursue the subordination or recharacterization of the claims of secured lenders who were also the debtors’...more

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