Employment Legislation Update
April 27, 2005
Employers that obtain credit reports or conduct background checks on applicants or current employees must be aware of recent changes to the Fair Credit Reporting Act (FCRA) and amendments made to FCRA by the Fair and Accurate Credit Transactions Act of 2003 (FACTA). FCRA imposes obligations on employers who procure "consumer reports" (defined to include information bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics and mode of living) and/or "investigative consumer credit reports" (which include information obtained from personal interviews with neighbors, friends or associates) from a third-party consumer reporting agency for an employment purpose -- including hiring decisions and evaluations of employees for promotion, reassignment or retention. Employers that fail to comply with FCRA's obligations risk civil liability, federal agency action, and possible corresponding state action.
Ninth Circuit Rules on SEC
April 27, 2005
On March 22, 2005, an <i>en banc panel</i> of the United States Court of Appeals for the Ninth Circuit, in a 10-to-1 decision, interpreted the bounds of Section 1103 of the Sarbanes-Oxley Act of 2002 (SOX), 15 U.S.C. ' 78u-3(c)(3). Section 1103 gives the Securities and Exchange Commission (SEC) the ability to petition a federal district court for a temporary 45-day freeze (which can be extended up to an additional 45 days) on any "extraordinary payments" likely to be made to corporate executives, employees or insiders of a company under investigation by the SEC.
One More Year
April 27, 2005
On March 2, 2005, the Securities and Exchange Commission granted non-accelerated filers -- companies with a public float of $75 million or less -- and foreign private issuers filing annual reports on Form 20-F or 40-F a 1-year extension for compliance with SEC rules adopted under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002.
Best Practices in Offshore Outsourcing
April 27, 2005
Parties engaged in private offshore outsourcing transactions (those not involving the provision of goods or services to federal or state governments) relaxed a bit last fall when it became apparent following the November elections that short-term prospects for federal anti-offshore outsourcing legislation had dimmed. Similarly, although bills that would have placed restraints on private offshoring were introduced in many state legislatures in 2004, most of these measures either were vetoed or have expired, making it appear unlikely that any substantial state anti-offshore outsourcing measures will be put in place in the near future. This does not mean, however, that certain other federal or state statutes or administrative rules might not impact a company's proposed offshore outsourcing transaction.
Final IRS Regulations Hurt Consolidated Groups
April 27, 2005
Just when you thought you had finally mastered the complex temporary regulations issued last March regarding the reduction of tax attributes of members of an affiliated group of corporations filing consolidated income tax returns ("consolidated group" or "group") following a cancellation of the debt, the IRS has served up another dose of "March Madness." The IRS has now issued those regulations in final form and has made some significant "revisions" to the provisions of the temporary regulations that focus on how tax attributes are to be reduced when a subsidiary either ceases to be, or becomes, a member of the consolidated group. This article briefly discusses how these significant "revisions" will impact financially troubled consolidated groups.
The Debtor's 'Insolvency' for Avoidance Actions
April 27, 2005
This article focuses on the uses of the term "insolvency" in the avoidance context, including the impact of the 2004 case, <i>Heilig-Meyers Co. v. Wachovia Bank N.A. (In re Heilig-Meyers Co.)</i>, 319 B.R. 447 (Bankr. E.D. Va. 2004), which, while limiting its analysis to a preference context, sheds some light on judicial gloss on the term "insolvency" as it is used both explicitly and implicitly throughout the Code. In addition, it examines definitions of "insolvent" and the presumption of insolvency in preference actions, discusses fair valuation and going-concern valuation methodology, and looks at the standard of proof and types of evidence to establish insolvency (including retrojection and projection).
The Metamorphosis of Assignment Clauses in Bankruptcy
April 27, 2005
How is this scenario for a debtor's nightmare? You negotiate a license agreement that provides for the assignment of the agreement to successors in interest so long as they agree to be bound by the terms of the agreement. You then file a Chapter 11 bankruptcy and as a debtor in possession, seek to assume that license agreement. The other party to the contract objects to such assumption and the Bankruptcy Court says that in light of such objection you cannot assume the license agreement. You cannot reorganize without the license. You are dead.
