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Commercial Bankruptcy Fiduciary Duty

Latham & Watkins LLP

Directors Duties and Misfeasance Trading Lessons From BHS

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Actions brought against the BHS directors by the group’s liquidators have resulted in the largest reported award for wrongful trading since the provision’s introduction, but the judgment highlights some unsettled areas of the...more

Troutman Pepper

5 Issues to Consider When Liquidating Through an ABC

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Assignments for the benefit of creditors, or ABCs, continue to grow in popularity as a tool for the orderly wind-down of companies. Originally published in Law360 - March 21, 2024....more

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

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As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of...more

Nelson Mullins Riley & Scarborough LLP

Practice Pointer: Reliance on Bankruptcy Court Appointed Examiner’s Report—Not so Fast

You represent the unsecured creditors committee in a complex Chapter 11 case, where you have reason to believe that the debtor’s officers and directors have, and continue to, engage in self-dealing and are breaching their...more

Goodwin

BTI v. Sequana - What’s new for directors in the zone of insolvency?

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In BTI 2014 LLC v. Sequana SA and Others [2022] UKSC 25 (“Sequana”), the Supreme Court confirmed the existence of a duty owed at common law by company directors to consider the interests of its creditors, and also provided...more

Venable LLP

UK Supreme Court Issues Long-Awaited Judgment Regarding Company Directors' Duties to Creditors

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​​​​​​​In an important decision for U.S. companies with UK subsidiaries, the UK Supreme Court recently handed down its long-awaited judgment in BTI 2014 LLC v. Sequana S.A., the first case in which the UK's highest court...more

Latham & Watkins LLP

Directors’ Duties: Shining Light in the Tunnel?

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In a new ruling, the UK Supreme Court concluded that the rule applies only when a company is “insolvent or bordering on insolvency”. On 5 October 2022, the UK Supreme Court handed down judgment in BTI 2014 LLC v. Sequana...more

Goodwin

Do Directors Have a Duty to Consider the Interests of Creditors Prior to Insolvency?

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On 5 October 2022, the English Supreme Court handed down its decision in BTI 2014 LLC v Sequana SA and others. This (as described by Lady Justice Arden) “momentous” decision principally concerns whether directors are under...more

Winstead PC

Court Held That Those In Control Of A Limited Liability Company May Owe Fiduciary Duties To The Company And Its Members

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​​​​​​​In In re Mijares, a plaintiff claimed that a defendant defrauded him and breached fiduciary duties owed to him by charging improper, excessive, and unauthorized expenses to their medical practice, causing the...more

Stradling Yocca Carlson & Rauth

A Recent Decision in the Toys “R” Us Bankruptcy Litigation May Have An Impact on Board Membership

Key Takeaways - The U.S. Bankruptcy Court for the Eastern District of Virginia recently published a critical opinion in a high profile dispute between Toys “R” Us’ creditors and some of the officers and directors of the...more

Robins Kaplan LLP

We Don’t Talk About Insolvency (No, No, No …)

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As a parent of three young children, Disney’s excellent new movie, Encanto, has been on heavy rotation in my household. It’s a story of an extended family whose members possess unique magical gifts. Through several humorous...more

Ervin Cohen & Jessup LLP

What Duties Do Receivers Have To Provide Creditors?

Q: I am a creditor of an entity that is now in receivership. I have contacted the receiver, and her attorney, a number of times requesting information about what is going on, especially the proposed sale of the entity’s...more

Dechert LLP

Avoiding an Out-of-Court Restructuring May Breach Fiduciary Duties

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Introduction Under Delaware law, the board of directors of an insolvent company has wide latitude to pursue good-faith strategies to maximize the value of the firm. Trenwick Am. Litig. Tr. v. Ernst & Young, L.L.P., 906 A.2d...more

Patton Sullivan Brodehl LLP

LLC Operating Agreements Can Reduce Fiduciary Duties

LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership.  (Corp Code §17704.09.)  These include the duty of loyalty, care, and...more

K&L Gates LLP

Key Considerations for Officers and Directors of Distressed Companies

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Even prior to the global impact of COVID-19, commercial bankruptcy filings were already on the rise. As stay-at-home orders caused many businesses to close or significantly curtail operations in 2020, financial struggles in...more

Mintz - Bankruptcy & Restructuring Viewpoints

The Expanding Contours of Permissible Non-Debtor Releases in the Ninth Circuit

Until recently, courts in the Ninth Circuit have generally followed the minority view that non-debtor releases in a bankruptcy plan are prohibited by Bankruptcy Code Section 524(e), which provides that the “discharge of a...more

Winstead PC

Bankruptcy Court Discussed The Fiduciary Duties Owed To A Limited Liability Company And Its Creditors By Its Manager

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In In re Silver State Holdings, in a bankruptcy proceeding a trustee of a limited liability company sued its former manager for breach of fiduciary duty and another entity for conspiracy to breach fiduciary duty arising out...more

Allen Matkins

Is There No Protection For The Innocent When A Corporation Transfers Its All To Secured Creditors?

Allen Matkins on

Last Friday, this space addressed itself to Vice Chancellor J. Travis Laster's ruling in  Stream TV Networks v. SeeCubic, C.A. No. 2020-0310-JTL (Dec. 8, 2020).   He concluded that stockholder approval was not required when...more

Jones Day

Delaware Bankruptcy Court Rules that Bankruptcy Blocking Right in Debtor's Corporate Charter Violates Federal Public Policy

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Courts sometimes disagree over whether provisions in a borrower's organizational documents designed to prevent the borrower from filing for bankruptcy are enforceable as a matter of federal public policy or applicable state...more

Sheppard Mullin Richter & Hampton LLP

Nota Bene Episode 94: Mapping COVID-19’s Impact on American Bankruptcy and Restructuring with Edward Tillinghast

Multinational boards are facing a major dilemma in response to COVID and its impact on their business forecasting. Many companies are facing insolvency and are left to decide how to approach bankruptcy proceedings. We’re...more

Jones Day

Directors' Duties—An Italian Overview: Tough Decisions Amid COVID-19 Emergency Legislation

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Italian COVID-19 legislation, with the aim of keeping companies alive by providing them with a short-term alternative to dissolution, provides for the suspension of (i) certain directors' obligations triggered by substantial...more

Rivkin Radler LLP

New York Insurance Coverage Law Update

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United States District Court Orders Insured To Produce Certain Pre-Litigation Documents But Not Others Deemed Work Product 99 Wall sued Allied World seeking coverage under a property policy for water losses at 99 Wall’s...more

Carlton Fields

The Coming Storm: DeFi and Bankruptcy Courts

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DeFi or “decentralized finance” is an emerging branch of the cryptocurrency and blockchain movement that attempts to use smart contracts and blockchains to provide financial services typically only available from centralized...more

Dechert LLP

Delaware Bankruptcy Court Diverges from Fifth Circuit: Minority Shareholder’s Blocking Right Invalidated and Fiduciary Duty...

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In a recent bench ruling, the Delaware bankruptcy court denied a motion to dismiss a chapter 11 bankruptcy filing, notwithstanding the fact that the filing contravened an express bankruptcy-filing blocking right, or “golden...more

Mintz - Bankruptcy & Restructuring Viewpoints

Delaware Bankruptcy Court Rules that Shareholder Cannot Enforce “Golden Share” Blocking Right to Dismiss Bankruptcy Filed Without...

As the COVID-19 pandemic continues to disrupt businesses and markets, and companies begin to look to bankruptcy courts for relief from the resulting liquidity and operational distress, the issue of creditor and shareholder...more

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