directors

Fiduciary Duties And Financial Distress In The Time Of COVID-19

Bob Eisenbach — Mon, 23 Mar 2020 14:58:51 +0000

The COVID-19 pandemic has caused unprecedented economic disruption, creating sudden financial distress across industries. Companies are now facing impacts ranging from a dramatic decline in revenue of uncertain duration, to potential setbacks to M&A transactions, to delayed or canceled financing rounds. With even some previously well-performing companies potentially entering the so-called zone…

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The Venture-Backed Company Running Out Of Cash: Fiduciary Duties And Wind Down Options

Bob Eisenbach — Tue, 16 Feb 2016 16:37:42 +0000

Many start-up companies backed by venture capital financing, especially those still in the development phase or which otherwise are not cash flow breakeven, at some point may face the prospect of running out of cash. Although many will timely close another round of financing, others may not. This post focuses on options available to companies when investors have decided not to fund and the company…

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You Say You Want A Dissolution: An Overview Of The Formal Corporate Wind Down

Bob Eisenbach — Tue, 24 Feb 2015 16:02:27 +0000

Winding Down. If a corporation’s board of directors decides that the business needs to be wound down, there are a number of legal paths to consider. Determining the best approach is fact-dependent, and the corporation and its board should get legal advice before making a decision. Sometimes a bankruptcy filing is needed, either a Chapter 11 reorganization (perhaps to complete a going-concern sale)…

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Winter 2012 Edition Of Bankruptcy Resource Now Available

Bob Eisenbach — Mon, 13 Feb 2012 13:42:21 +0000

The Winter 2012 edition of the Absolute Priority newsletter, published by the Bankruptcy & Restructuring group at Cooley LLP, of which I am a member, has recently been released. The newsletter gives updates on current developments and trends in the bankruptcy and workout area. Follow the links in this sentence to access a copy of the newsletter. You can also subscribe to the blog to learn when…

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Delaware Supreme Court Affirms Ruling Protecting Managers Of Insolvent LLCs

Bob Eisenbach — Wed, 14 Sep 2011 14:31:40 +0000

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 case…

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New Ruling Finds Important Protection For Managers Of Insolvent Delaware LLCs

Bob Eisenbach — Tue, 16 Nov 2010 12:25:57 +0000

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, click on the case…

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

Bob Eisenbach — Tue, 23 Mar 2010 16:08:09 +0000

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 92 (Del. 2007). To read that decision…

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Recent California Decision Addresses Whether Directors And Officers Can Be Liable For Unpaid Wages Of A Bankrupt Company

Bob Eisenbach — Tue, 08 Jul 2008 01:54:43 +0000

When insolvent companies are unable to make payroll or to pay accrued vacation or other amounts owed employees, the question often arises whether directors, officers, or shareholders face personal liability for these unpaid amounts. The California Court of Appeal recently addressed that issue, examining whether particular sections of the California Labor Code, as well as section 17200 of the…

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New Article Examines Latest Deepening Insolvency Trends

Bob Eisenbach — Wed, 27 Feb 2008 23:04:06 +0000

For a number of years, the concept of deepening insolvency has been one of the more hotly debated issues in the insolvency arena. Two of my colleagues in the Bankruptcy & Restructuring group at Cooley Godward Kronish LLP, Michael Klein and Ronald Sussman, have written an interesting article entitled "Tide Has Turned On Deepening Insolvency – Courts Now Rejecting Theory As Cause Of Action…

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

Bob Eisenbach — Thu, 16 Aug 2007 04:58:06 +0000

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 and for the reasons assigned…

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