Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Guidelines for Director Decision Making in Chapter 11
Chapter 11 is designed to enable a company in financial distress to preserve its business as a going concern and maximize the distributable value to creditors. This may be accomplished through the debtor's rehabilitation of its business and restructuring of its balance sheet through a stand-alone plan of reorganization or through the sale of its assets or businesses pursuant to section 363 of the Bankruptcy Code (or a Chapter 11 plan). The best course of action to preserve the debtor as a going concern and maximize value is dependent on the facts and circumstances of the Chapter 11 case and the interests of the relevant stakeholders.
During a Chapter 11 case, the interests of the debtor's main constituencies — eg, secured lenders, unsecured creditors, management and employees — often conflict. For example, the secured lenders may want a prompt sale of the business to assure that its value is maintained and they are repaid (partially or in full) as soon as practicable. On the other hand, the debtor's unsecured creditors and management team may be desirous of a longer Chapter 11 case. This desire is fueled by the hope that, as time goes on, the value of the business will increase (which would maximize distributions to unsecured creditors) and the Chapter 11 case may be effectuated through a stand-alone restructuring (which would increase the likelihood that the management team keeps its job).
A debtor's board of directors is responsible for making the major decisions in a Chapter 11 case. These decisions, which must be consistent with the goal of preserving the debtor as a going concern (if possible) and maximizing value of the debtor's estates, are subject to bankruptcy court approval. A board's adherence to non-bankruptcy corporate governance standards will insulate its decisions from being second-guessed by the bankruptcy court.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.