News & Analysis as of

Carve Out Provisions

Court Finds Fraud Carve Out Ambiguous in Stock Purchase Agreement

In EMSI Acquisition, Inc., v. Contrarian Funds, LLC et al, the Delaware Court of Chancery examined a fraud carve out from an indemnification cap and an action for confirmation of an auditors award on a purchase price...more

Defendants in Stock Purchase Indemnification Action Entitled to Advancement under Bylaws

In Davis et al v. EMSI Holding Co., the Delaware Court of Chancery held that officers and directors of an acquired company were entitled to advancement under the acquired Company’s by-laws for expenses incurred in defending...more

Legislature Finds More Opportunity to Work: AB 5 Moves Along

by Seyfarth Shaw LLP on

Seyfarth Synopsis: The California Assembly Committee on Labor and Employment yesterday heard and approved AB 5, The Opportunity to Work Act, as it continues to move through the legislative process....more

Proskauer’s 2017 IPO Study

by Proskauer Rose LLP on

Proskauer’s Global Capital Markets Group has released its fourth annual IPO Study, a comprehensive analysis of U.S.-listed initial public offerings that priced in 2016, including an identification of IPO trends over a...more

Section 1129(a)(9)(A) Trumps DIP Orders

by Cole Schotz on

On January 5, 2017, Judge Sontchi of the Bankruptcy Court for the District of Delaware issued an opinion (the “Opinion”) in the pending Molycorp Chapter 11 case (Case No. 15-11357). In re Molycorp, Inc., 562 B.R. 67 (Bankr....more

Ninth Circuit Enforces Arbitration Agreement's Class Action Ban, but Only After Severance of PAGA Ban

by FordHarrison on

A panel of the U.S. Court of Appeals for the Ninth Circuit recently overruled a lower court’s decision refusing to enforce an arbitration agreement, holding that the dispute resolution provision of the agreement was valid and...more

Court of Chancery Addresses Effect Of Carve-Outs On The Question Of Substantive Arbitrability

by Morris James LLP on

This case involves the overlap of an advancement dispute and the question of substantive arbitrability under Willie Gary. The two-part test of Willie Gary asks whether the parties (i) generally referred all disputes to...more

Ninth Circuit Reverses District Court Decision On Unconscionability Of Dispute Resolution Agreement, Severs Problematic Provisions

by Carlton Fields on

The Ninth Circuit reversed a district court’s finding that a dispute resolution provision (“the Provision”) of an employment agreement was substantively and procedurally unconscionable, upholding the provision as not tainted...more

So What Does a Bankruptcy Carve-Out Clause Really Mean? Delaware Bankruptcy Court Concludes It is Not a Cap on Fees After All

by Murtha Cullina on

In chapter 11 bankruptcy cases, it is not uncommon for secured parties/lenders to provide a “carve-out” for various professional fees. Frequently there may be a “carve-out” for “all chapter 11 professionals” or the...more

Delaware Bankruptcy Judge: A Carve-Out for Fees Is Not a Cap

by Kelley Drye & Warren LLP on

Judge Christopher Sontchi recently issued an important opinion in the Molycorp chapter 11 case. He held that a standard carve-out in a financing order for the fees of counsel and other professionals for an official...more

CFPB Grabs for SEC/CFTC Turf

by Carlton Fields on

In May, the Consumer Financial Protection Bureau (CFPB) proposed a ban on “mandatory arbitration” contract clauses that make financial products consumers waive their right to join class actions. Broker-dealers,...more

Broker-Lite: FINRA Built It, But Will They Come?

by Morgan Lewis on

On August 18, 2016, the US Securities and Exchange Commission (SEC) approved a new Financial Industry Regulatory Authority (FINRA) rule series intended as a “lite” framework for the registration and regulation of brokers that...more

"Insights Conversations: Employment Factors to Consider in Carve-Out Transactions"

Carve-out transactions can quickly become complicated by employment considerations — who stays, who goes and what practices govern the transitions. At the April 18, 2016, "Skadden Cross-Border M&A Conference 2016:...more

When and How Can a Chapter 7 Bankruptcy Trustee Liquidate Your Collateral?

by Murtha Cullina on

So you are chugging along with a foreclosure action (either on real and/or personal property) only to be stopped in your tracks by the borrower filing a voluntary Chapter 7 bankruptcy petition. The usual, immediate thought...more

Good News on “Bad Boy” Guarantees – IRS Reverts to Prior Position in Recent Legal Advice Memorandum

by Mintz Levin on

On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the...more

Update: New IRS Memo on Bad Boy Guarantees

by Ropes & Gray LLP on

Prior Alert. The March 17 Alert noted that the IRS in a Chief Counsel Advice ("CCA") had discussed the effect that certain “bad boy carve-out guarantees” (that would trigger contingent guarantee obligations if, for example,...more

West Coast Real Estate Update: May 2016 #1

by Holland & Knight LLP on

IRS Reevaluates "Bad Boy" Carve-Outs - Before providing a non-recourse loan to a Limited Liability Company (LLC) – i.e., one for which the LLC members do not bear the risk of economic loss – a lender often will require...more

New Guidance on Bad Boy Guarantees

by Miles & Stockbridge P.C. on

The IRS Office of Chief Counsel recently released a memorandum (#AM2016-001) addressing the proper tax treatment of nonrecourse carve-outs (or bad boy guarantees) in the partnership context. According to the memorandum, such...more

Tax and Non-Tax Reasons to be Cautious about “Bad Boy Nonrecourse Carve-out Guarantees” - IRS Backtracks on Recent Conclusion that...

by Locke Lord LLP on

On April 15, 2016 the IRS reversed its controversial position that bad boy guarantees may convert nonrecourse debt into recourse debt. General Legal Advice Memorandum Number AM2016-001 released April 15, 2016 effectively...more

IRS Reverses Position on “Bad Boy” Guarantees

by Butler Snow LLP on

Earlier this year, the IRS issued Chief Counsel Advice 201606027 (February 5, 2016) concluding that, for purposes of the basis and at-risk limitations, an LLC member’s guarantee of entity-level nonrecourse debt conditioned...more

Florida Court Says it’s Not Fraud When Misrepresentations are Made During Settlement Negotiations

When settling a case, litigators are naturally focused on avoiding “Round 2” of the litigation for their clients. Toward this goal, lawyers avoid drafting settlement agreements that include any sort of representations or...more

Financial Services Quarterly Report - First Quarter 2016: Northstar Decision on Remand: U.S. District Court Holds SLUSA Precludes...

by Dechert LLP on

In a complete victory for Defendants, on February 23, 2016, a federal district court dismissed with prejudice the final remaining claims in Northstar Financial Advisors, Inc. v. Schwab Investments et. al., which had been...more

Auditing Standard 18 Ramifications for Management’s Related Party Representations

by Morgan Lewis on

Companies’ management should consider whether to add a materiality carve-out to the related party representations now being included in management representation letters as a result of the PCAOB’s Auditing Standard No. 18 (AS...more

New IRS Regulations for Mixed-Use Projects Financed With Tax-Exempt Bonds Have Practical Importance

by Foley & Lardner LLP on

On October 27, 2015 the U.S. Treasury Department and Internal Revenue Service published final regulations concerning the treatment of “mixed-use” projects financed with tax-exempt bonds. These new regulations have significant...more

SEC Approves Rule to Regulate Debt Research Reports and Debt Research Analysts

by Morgan Lewis on

Background - Eight years in the making, the US Securities and Exchange Commission (SEC) has finally approved the Financial Industry Regulatory Authority’s (FINRA's) proposed Rule 2242 (the Rule or Rule 2242), which will...more

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