insolvent

A New Way Of Looking At Termination On Bankruptcy Contract Clauses

Bob Eisenbach — Mon, 23 Jun 2014 14:57:56 +0000

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”…

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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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Assignments For The Benefit Of Creditors: Simple As ABC?

Bob Eisenbach — Mon, 17 Mar 2008 03:38:12 +0000

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, commonly known as an "ABC."

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Are “Termination On Bankruptcy” Contract Clauses Enforceable?

Bob Eisenbach — Mon, 17 Sep 2007 01:51:07 +0000

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 look at these provisions…

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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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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

Bob Eisenbach — Tue, 22 May 2007 05:10:30 +0000

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 whether creditors can sue directors of…

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

Bob Eisenbach — Sun, 19 Nov 2006 15:14:00 +0000

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 of why it happens, no one wants to ship goods…

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