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Enforceability of Governance Provisions Restricting Access to Seek Bankruptcy Relief

By Corinne Ball
March 01, 2025

For more than six years there has been an ongoing debate regarding the enforceability of governance restrictions, whether blocking rights, golden shares and other provisions designed to manage access to bankruptcy relief.

Following the failure in 2009 of attempted bankruptcy remote protections in each of various real estate projects in General Growth Properties, 409 B.R. 43 (Bankr. S.D.N.Y.), there has been a series of cases in different jurisdictions addressing the enforceability of governance provisions restricting a company’s ability to seek bankruptcy relief.

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