A Cautionary Tale for Lender Overreaching into Bankruptcy Remoteness

In re Lexington Hospitality Group, LLCBankruptcy remote structures are often used to protect against the impact of default under a credit facility. A common mechanism is organizational documents requiring an outside director or member's vote to authorize a bankruptcy filing. However, the United States Bankruptcy Court for the Eastern District of Kentucky found that such a requirement implemented at the behest of a lender, among other bankruptcy restrictions, and where there was not true independence frustrated the important federal public policy of favoring fresh starts in bankruptcy.

10 minute read April 01, 2018 at 12:05 AM

Jeffrey S. Greenberg

Bankruptcy remote structures are often used to protect against the impact of default under a credit facility. A common mechanism is organizational documents requiring an outside director or member's vote to authorize a bankruptcy filing.

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A Cautionary Tale for Lender Overreaching into Bankruptcy Remoteness

This premium content is locked for The Bankruptcy Strategist subscribers only

Continue Reading

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Applying the Zero Trust Model to Manage Risks of Agentic AI

California’s AI Transparency Stack: From State Obligation to Adoption Strategy

How to Prevent Your Outsourcing or Managed Services Engagement from Failing