<i>Trenwick America</i>
October 30, 2006
The issue of directors' and officers' liability for deepening insolvency has been the source of a significant number of judicial opinions over the past few years with little consensus being reached on the viability of these claims. This may have changed however. Despite the Delaware Bankruptcy Court's recent decision, <i>In re: Scott Acquisition Corp.</i>, 2006 WL 1732277 (Bankr. D. Del. 2006), which ruled that directors and officers of insolvent subsidiary companies owe fiduciary duties to both its creditors and the subsidiary itself. The Delaware Chancery Court, Vice Chancellor Leo E. Strine presiding, subsequently and resoundingly waded into the breach of fiduciary duty and zone of insolvency arena with its decision in ,<i>Trenwick America Litigation Trust v. Ernst &Young, L.L.P., et al.</i>
Backdating Issues
October 30, 2006
The recent wave of investigations and lawsuits involving the alleged backdating of stock options promises to become one of the most widespread corporate crises in recent years. As these allegations mount, targets of the investigations will look to their insurance companies to help pay their potentially substantial defense costs and any resulting liabilities. <br>At the same time, insurance companies will be looking for ways to minimize, or even evade entirely, their coverage obligations. As a result, targets of backdating investigations must move quickly to protect their insurance coverage.
Counseling the Corporate Board
October 30, 2006
The composition of the modern corporate board has evolved into a complex and sophisticated governing body that places increasing demands on the lawyers. In the post Enron and Sarbanes-Oxley world, corporate boards continue to be comprised of directors with their own myriad personal and business agendas. These boards, however, have also become more mindful and responsive to watchdog agencies, and have a renewed focus on board independence, financial expertise and diversity. There is, therefore, an increased need for adaptable, experienced, and informed lawyers ' both in house as well as outside a given company ' to counsel the board and its members on these and other controversial issues. The best practices for doing so, including those addressing how to better understand the client board's structure, culture and goals, as well as the board member's personal concerns, is the subject of this piece.
Recharacterization
October 30, 2006
In the recent case of <i>In re Dornier Aviation (North America), Inc.,</i> the United States Court of Appeals for the Fourth Circuit held that ' 105(a) of the Bankruptcy Code provides the bankruptcy court with authority to recharacterize a claim from debt to equity. In upholding the recharacterization of a parent's $84 million claim against its wholly owned subsidiary, the Fourth Circuit made clear that form will not prevail over substance in the context of inter-company transactions. The Fourth Circuit failed, however, to provide any guidance on how inter-company transactions might be structured to avoid recharacterization under ' 105(a). This article presents one obvious, albeit not often utilized, solution: Parent corporations should collect debts due and owing from their subsidiaries to avoid the possibility of being relegated to the unenviable position of an equity investor in the event of a bankruptcy proceeding.
ADA Mental Illness Claims Increase in The Workplace
September 28, 2006
As the stigma of mental illness lessens, employers are handling more frequent requests for accommodation under the Americans with Disabilities Act (ADA). Because serious physical impairments are often easier to identify and accommodate, learning to handle the gray areas of mental disorders as they relate to the ADA can be a challenge for employers.
Effective Legal Holds Policy Requires IT-Legal Interaction
September 28, 2006
The explosive growth in electronic communications has resulted in a corollary growth of e-mail as a primary source of legal discovery when organizations are faced with litigation. As recent high profile cases demonstrate, traditional litigation hold processes are being successfully challenged as inadequate in the context of electronic communications. The lesson, therefore, is that if a company uses technology to run its daily business operations, it will be expected to utilize similar technologies to search, collect and produce requested or subpoenaed business records. Symantec Corporation, a developer of security and availability software tools, is leveraging its own products and the expertise of both its legal and IT departments to develop and implement a litigation hold program designed to significantly reduce the time and money spent to collect and preserve e-mail records. This article summarizes some of the 'lessons learned' by Symantec as we worked with our own technology to develop our legal hold program.
Managing Electronic Evidence
September 28, 2006
Discovery demands on in-house legal staff have changed drastically in recent years. Historically, complying with subpoenas and document production requests were quotidian chores for in-house legal staff. After receiving a complaint, counsel's office issued a standard 'document hold' to affected employees and directed that those involved in the case preserve their files and not destroy anything. Questions might arise, but they were manageable. What must be disclosed? What documents are privileged? How long will it take to retrieve documents from storage? How many staff hours will complying require? How much will it cost? Who bears the cost? Which discovery requests should be challenged?
Outsourcing Disputes
September 28, 2006
A spectacular smash-up always draws a crowd. In the outsourcing world, where the wreckage is nearly always kept under wraps, that's even more true. When a problem deal does break into view, it's always worth watching for lessons in how to manage ' or how not to manage ' these complex transactions. Counsel with responsibility for managing outsourcing relationships or contemplating new ones have two new cases to chew over that offer intriguing glimpses into troubled deals: A suit filed by Sprint Nextel against IBM in May, and an English case decided in June involving Vertex Data Sciences and its client Powergen.
Meet & Confer Checklist
September 28, 2006
Preparing for the amendments to the Federal Rules of Civil Procedure (FRCP) will require careful planning and preparation. Following are steps designed to help general counsel more effectively negotiate the scope of electronic discovery at an FRCP Rule 26(f) Meet & Confer conference.
Media & Communications Corner: Meet Hank Shafran ' Director of Communications at Bingham McCutchen LLP
September 01, 2006
With more than 30 years in PR, Hank Shafran has experience in all aspects of agency, governmental and corporate communications. But he has seen law firm PR, in particular, from a unique perspective with more than 10 years at Bingham McCutchen LLP, where he has worked on the PR end of six different mergers and seen the firm grow from a 175-lawyer Boston firm to a 950-attorney global firm.
