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Preventing Conflicts Between Secured Creditors and Franchisors
Lenders, franchisees, and franchisors all have a concern in preventing conflicts between their respective interests. The Uniform Commercial Code (“UCC”) was amended to strike a balance among the parties. However, the recent credit crisis has demonstrated that the UCC is only the starting point for the analysis. Some counsel advocate that franchisors should attempt to perfect their interests as secured creditors. The realities of franchising require closer study of whether this is advisable and whether it is better to negotiate superior arrangements.
The UCC grants secured creditors certain “rights, obligations and remedies” against third parties, such as the borrower, other lenders, tax creditors, and the franchisor. In UCC parlance, the “secured creditor” (typically a lender) takes a “security interest” (a lien) in “collateral” (typically assets of the franchisee), and that interest has priority over the conflicting claims of third parties (other creditors and the franchisor). The secured interest is “authenticated” by a “security agreement,” which is the contract between the secured creditor and the debtor. The security agreement describes the collateral that secures the debt, and the rights and remedies of the secured creditor. Theoretically, the security agreement no longer needs to be in writing as long as it is authenticated by click license or even an audio recording (if it is authenticated). Merely having a security interest in collateral is insufficient for the secured creditor to gain much advantage over other conflicting interests.
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.
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.
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.
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.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.