Written vs. Oral Joint-Defense Agreements
March 29, 2005
The Joint-Defense Agreement (JDA) has become a fixture in complex white-collar cases and even many purely civil actions. When the government begins an investigation of a company and its employees, it is often advisable and sometimes necessary to secure separate representation for the company, its employees and perhaps other entities or individuals. Independent attorneys owe a duty of loyalty to their individual clients and can provide them with personalized, confidential legal advice that an attorney for the company cannot provide. The company, however, needs to communicate with these represented parties. Employees will speak frankly with company counsel only if they know they are not exposing themselves to prosecution. A company cannot produce documents and engage in frank conversation with the government without such employee cooperation.
Must New Value Remain Unpaid to Serve As a Defense to a Preference Action?
March 29, 2005
Does subsequent new value need to be unpaid to constitute a defense to a preferential transfer under section 547(c)(4)? The issue arises when a creditor asserts the subsequent new value defense to a preference action, on the basis that additional credit (goods or services) was extended after the preferential transfer occurred, even if the subsequent new value was paid for by the debtor. With every decade comes a new wrinkle in the discussion on whether the subsequent new value provided must remain unpaid. The issue has been resurrected recently due to the frequency of critical vendor orders authorizing the post-petition payment of pre-petition debt and debtors-in-possession agreeing to pay reclamation claims in exchange for keeping the goods.
A Model for Canadian Cross-Border Insolvency
March 29, 2005
The trend toward commercial globalization has led to an increase in the number and complexity of cross-border bankruptcy cases. The ability to overcome differences in legal systems, often through the cooperation and coordination of courts in different countries, can be a key factor in the success or failure of a restructuring.
'Practice By Ambush'
March 29, 2005
In their desire to zealously represent clients, practitioners may often attempt to rewrite the Bankruptcy Code or Rules in motions or reorganization plans. However, recent opinions have taken umbrage with these efforts to conduct "practice by ambush" that either propose provisions inconsistent with the Bankruptcy Code or seek to deprive parties in interest of due process, or both. After all, fundamental due process " ... is the cornerstone underpinning bankruptcy procedure...A creditor has the right to rely on the Bankruptcy Code and Rules and to expect to be accorded due process of law in accordance with the Bankruptcy Code and Rules, and the United States Constitution." <i>In re Whelton</i>, 299 B.R. 306, 318 (D. Vt. 2004).
Securities Settlements Reach Record High in 2004
March 29, 2005
Settlement amounts in securities class actions reached a record high of $5.5 billion in 2004, according to a new national study conducted by Cornerstone Research that compares settlements of cases filed since the passage of the Private Securities Litigation Reform Act in 1995.
Ethics: It's Not Just for Lawyers Anymore
March 29, 2005
Last month's multi-million dollar settlements by the individual directors of Enron and WorldCom no doubt will exacerbate anxieties already being felt by corporate directors and increase instances of questions such as: Is it safe to be a director of a public company? What should I be concerned about when joining a board? What can I do to protect myself as a director?
Delaware Chancery Court Upholds Majority Stockholder Lock-up
March 29, 2005
In <i>Orman v. Cullman</i>, 2004 WL 2348395 (Del.Ch.), the Delaware Chancery Court's first decision interpreting the Delaware Supreme Court's controversial 2003 Omnicare decision (<i>Omnicare, Inc. v. NCS Healthcare, Inc.</i>, 818 A.2d 914 (Del. 2003)), the court upheld an 18-month lock-up agreement required by a buyer from a controlling stockholder. Noting that the public stockholders had retained full authority to veto the transaction, the board had negotiated an effective fiduciary out, and any interested third party was free to purchase the publicly owned shares of the target, the Chancery Court dismissed plaintiff's breach of fiduciary duty claim on summary judgment and ruled that the lock-up did not "impermissibly coerce" the public shareholders to approve the merger.
