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The Bankruptcy Code's Inherent Limitations for Struggling Golf Courses
As addressed in the first of this two-part article last month, addressing the problems confronting golf course owners seeking financial restructuring under Chapter 11, the ability of a debtor to reject a restrictive covenant under Section 365 or to sell free and clear of a covenant under Section 363(f) is limited and the obstacles are difficult to surmount. A possible solution, however, may surface if a debtor can demonstrate a change of circumstances under state law.
In order to dispose of a burdensome covenant, a debtor typically will need to demonstrate that: 1) a change of circumstances has occurred which has severely impacted the original intent of the restriction; or 2) the covenant is an improper restraint on alienation. In California, for example, “[restrictive] covenants will be construed strictly against persons seeking to enforce them, and in favor of the unencumbered use of the property.” Biagini v. Hyde, 3 Cal. App. 3d 877, 880, 83 Cal. Rptr. 875 (1970); see also, Ezer v. Fuchsloch, 99 Cal. App. 3d 849, 861, 160 Cal. Rptr. 486 (1979).
Change of Circumstances
Nevertheless, to demonstrate a change of circumstances, the general rule is that the change must be of such a dimension “that it is no longer possible to accomplish the original purpose intended by the restriction,” or the enforcement of the restrictive covenant “would be inequitable, or unreasonable, or oppressive.” County of Butte v. Bach, 172 Cal. App. 3d 848, 867, 218 Cal. Rptr. 613 (1985). See also, Gladstone v. Gregory, 95 Nev. 474, 498, 596 P.2d 491, 494 (1979) (“[c]hanged conditions sufficient to justify nonenforcement of an otherwise valid restrictive covenant must be so fundamental as to thwart the original purpose of the restriction. … [R]espondents had the burden to show the changed conditions have so thwarted the purpose [so that] it would be inequitable or oppressive to enforce the restriction.”).
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.