In the Red – The Business Bankruptcy Blog

In the Red – The Business Bankruptcy Blog

The Business Bankrupty Blog

Tag Archives: insolvent

A New Way Of Looking At Termination On Bankruptcy Contract Clauses

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Image Courtesy of NobMouse Ken Adams, Professor Adrian Walters, and I recently collaborated on an article about the ubiquitous “termination on bankruptcy” or ipso facto clauses in contracts. The article was just published by the American Bar Association’s Business Law Section in its online publication, Business Law Today. It’s titled “Termination-On-Bankruptcy Provisions: Some Proposed Language” and is available by … Continue Reading

Delaware Supreme Court Affirms Ruling Protecting Managers Of Insolvent LLCs

Posted in Recent Developments, The Financially Troubled Company
Creditor Derivative Claims Against Fiduciaries Of Insolvent Corporate Entities. In a 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d 92 (Del. 2007), the Delaware Supreme Court held that directors of an insolvent Delaware corporation could be sued derivatively by creditors for breaches of fiduciary duty. For a discussion of the … Continue Reading

New Ruling Finds Important Protection For Managers Of Insolvent Delaware LLCs

Posted in Recent Developments, The Financially Troubled Company
Derivative Claims Against Directors Of An Insolvent Delaware Corporation. With its 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d 92 (Del. 2007), the Delaware Supreme Court held that directors of an insolvent Delaware corporation could be sued derivatively by creditors for breaches of fiduciary duty. To read that decision, … Continue Reading

California Court of Appeal Provides Guidance For Directors Of Financially Distressed California Corporations

Posted in Recent Developments, The Financially Troubled Company
As I have reported over the past several years, Delaware courts, including the Delaware Supreme Court, have addressed the nature of a director’s fiduciary duties when a Delaware corporation is insolvent or in the "zone of insolvency," most notably with the 2007 decision in North American Catholic Educational Programming, Inc. v. Gheewalla, et al., 930 A.2d … Continue Reading

Assignments For The Benefit Of Creditors: Simple As ABC?

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Companies in financial trouble are often forced to liquidate their assets to pay creditors. While a Chapter 11 bankruptcy sometimes makes the most sense, other times a Chapter 7 bankruptcy is required, and in still other situations a corporate dissolution may be best. This post examines another of the options, the assignment for the benefit of creditors, … Continue Reading

Are “Termination On Bankruptcy” Contract Clauses Enforceable?

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Practically every contract has a provision that makes the bankruptcy or insolvency of one contracting party a trigger for the other party to terminate the contract. These are standard fare and rarely negotiated unless they also include a provision for the reversion back of ownership of property, often intellectual property, upon bankruptcy or insolvency. This post takes a … Continue Reading

Delaware Supreme Court Issues Long-Awaited Decision In Deepening Insolvency Case

Posted in Business Bankruptcy Issues, Recent Developments, The Financially Troubled Company
On August 14, 2007, the Delaware Supreme Court, sitting en Banc and following oral argument, issued its decision in the Trenwick America Litigation Trust v. Billet deepening insolvency case. Rather than write its own opinion, the Delaware Supreme Court released a two-page order affirming Vice Chancellor Strine’s August 10, 2006 Chancery Court decision "on the basis of … Continue Reading

Delaware Supreme Court Addresses, For The First Time, Whether Creditors Can Sue Directors For Breach Of Fiduciary Duty When The Corporation Is Insolvent Or In The Zone Of Insolvency

Posted in Recent Developments, The Financially Troubled Company
Almost sixteen years ago, the Delaware Chancery Court’s decision in Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications Corp., 1991 WL 277613 (Del. Ch. 1991), helped introduce the terms "vicinity of insolvency" and "zone of insolvency" into the legal and business lexicon. Since then, the Chancery Court issued a number of decisions on the question of … Continue Reading

Reclamation: Can A Vendor “Get The Goods” From An Insolvent Customer?

Posted in Business Bankruptcy Issues, The Financially Troubled Company
Although vendors sell goods to get paid, it doesn’t always work out that way. If the customer is insolvent or files bankruptcy, the vendor may be stuck with an unpaid account. To make matters worse, some customers (especially those with limited prospects for financing) may even "load up" on inventory and then file bankruptcy without paying. Regardless … Continue Reading