Sarbanes-Oxley Sentencing Guidelines
April 27, 2004
Last month, we discussed the Sentencing Table as of Nov. 1, 2003, which incorporates amendments resulting from the provisions of the Sarbanes-Oxley Act. We explained that the Act contains three overlapping provisions relating to sentencing guidelines premised on the notion that white-collar crime is not adequately punished, and that all three provisions require the U.S. Sentencing commission to "promulgate the guidelines or amendments provided for under this section as soon as practicable..." Our discussion, unless otherwise indicated, was and is based on the amended guidelines pertaining to "Theft, Embezzlement, Receipt of Stolen Property, Property Destruction, and Offenses Involving Fraud or Deceit," and the related Sentencing Table. This month, we continue this discussion by providing more material in depth.
Compliance Hotline
April 27, 2004
The latest rulings of importance to you and your practice.
Quarterly State Compliance Review
April 27, 2004
By now everyone is familiar with the federal legislative response to Enron and the other corporate scandals -- namely, the Sarbanes-Oxley Act. But how have the states responded? After all, the states have been, and remain, principally responsible for corporate governance. The following is a brief review of the most recent legislative responses to the corporate scandals from some of the more important incorporation states.
Nonprofit Governance Reforms
April 27, 2004
The advent of significant corporate governance reforms in response to the Sarbanes-Oxley law, as well as scandals involving several leading nonprofit institutions, has created a climate of uncertainty for the management and Boards of Directors of nonprofit organizations. Controversy has arisen as to the extent to which these entities should emulate the behavior of comparably sized public corporations, even though most of Sarbanes-Oxley does not apply to entities that do not have securities registered with the Securities and Exchange Commission.
The 'Doctrine of Necessity'
April 26, 2004
Last month, we explained that a bankruptcy court lacks "either the statutory or equitable power to authorize" the debtor's payment of pre-bankruptcy nonpriority unsecured claims, as noted in <i>Capital Factors, Inc. v. Kmart Corp. (In re Kmart Corp.)</i> We explained that the clear, no-nonsense opinions of the district court and the Court of Appeals reversed four bankruptcy court orders, and we explained why the Seventh Circuit's <i>Kmart</i> decision is noteworthy. We went on to discuss the "Doctrine of Necessity" (the Doctrine), a current justification used by some bankrtupcy courts to permit the post-petition payment of certain assertedly "essential" pre-petition claims in Chapter 11 reoganized cases. This month, we discuss Principal Judicial Precedents, Decisions Favorable to the Doctrine, Cases Rejecting the Doctrine, and The Rebirth of the "Doctrine of Necessity."
Preferential Transfers
April 26, 2004
Last month, we explained that when a once steady and reliable customer becomes delinquent in payment and eventually files for bankruptcy protection, your client becomes one of many creditors trying to recover a portion of its investment. We explained how, whenever a creditor receives a benefit from a debtor shortly before the debtor files for bankruptcy, a preferential transfer may occur. And we showed how section 547(b) of the Bankruptcy Code permits a trustee to avoid pre-bankruptcy transfers as "preferences." The first tactic we discussed for defending such preference actions was to dispute plaintiff's <i>prima facie</i> case. In this month's installment, we discuss preference avoidance by statutory exception, and the availability of a jury trial.
True Lease or Secured Financing?
April 26, 2004
In the Chapter 11 context, it is common for interested parties to challenge the characterization of a Chapter 11 debtor's obligations under an agreement styled as a lease. A Bankruptcy Court's determination as to whether a transaction is a "true" lease or a secured financing can have far-reaching consequences on the administration of a debtor's Chapter 11 case and the respective rights of each party to the agreement. As the recent decision by the Third Circuit Court of Appeals in <i>Duke Energy Royal, LLC v. Pillowtex Corp. (In re Pillowtex, Inc.)</i>, 349 F.3d 711 (3d Cir. 2003) illustrates, when faced with the question of whether a transaction constitutes a "true" lease or a secured financing, bankruptcy courts will look beyond the form to the substance of the parties' agreement.
The Leasing Hotline
April 23, 2004
Highlights of the latest commercial leasing cases from around the country.
Issues Requiring Attention in Lien Waiver, Access Clause
April 23, 2004
The first part of this article described the contents of the lien waiver and access agreement provision required by asset-based lenders. The conclusion discusses the major issues to be covered in the provision.
