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So You Think You Own Preferred Stock?
It is no secret that the bulk of today's activity in the private equity sector is taken up with late rounds of financing. Typically, the VCs (ie, private equity funds, including but not limited to funds which are the incumbent in a particular company's series of preferred shares) negotiate the terms of, let's call it, the Series D round ' a so-called “follow on” round. The D Round succeeds, in point of time, the initial issuance to the following investors: common stock to the founders, friends and family and sometimes angels, followed by Series A, B and C convertible preferred shares, to the professional investors.
As VCs in the D round survey the balance sheet and capital structure, they note it is sufficiently cluttered that the company, unless it cleans up its capital structure, may be unfinanceable. And, while the majority of the holders of the A, B and C Series may be amenable to a new round of financing, the vote in favor of the term sheet suggested by the investors in the Series D round (often highly dilutive) may be less than one hundred percent. There is often an intractable, truculent holdout ' someone or some institution who or which, for one reason or another, has entirely lost confidence in the company and its management, or is otherwise disaffected. Some of the holdouts may be impervious to the argument that, absent new financing, the company will fail. “Let it fail,” may be their response. Or, alternatively, “pay me extra baksheesh to persuade me to give up my blocking position.”
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.
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.
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.
Compliance Officers: Recent Regulatory Guidance and Enforcement Actions and Mitigating the Risk of Personal Liability
This article explores legal developments over the past year that may impact compliance officer personal liability.
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.