Special Issue: The 'Hottest Issues' Get Hotter; The Bayou Hedge Funds Fraud
December 27, 2006
Investor confidence and market behavior can be impacted greatly by events that do not necessarily correlate. In the case of the Bayou Hedge Funds fraud, these unique and non-recurring events fueled a fire in the hedge fund industry that has spread, but not necessarily due to the particulars of the Bayou Hedge Funds failure. But, when dealing with significant investments made by pension funds, corporate entities, along with foundations and trusts, a healthy dose of skepticism is natural and appropriate. Not unlike the transition from the Enron scandal to the formation of the Public Company Accounting Oversight Board, hedge fund investors may extrapolate the troubles at the Bayou Hedge Funds to all hedge funds. As a result, questions of the need for regulatory oversight for a stronger accountability within the industry arise.
Beware the Gatekeeper
December 22, 2006
Last month, we explained that valuation issues come into play throughout Chapter 11 business reorganization cases. We discussed how to recognize the uncertainties underlying expert valuation conclusions; enterprise/going concern value; and the fact that the goal of any valuation is to make an estimate based on an informed judgment that embraces all facts relevant to future earning capacity and hence to present worth, including, of course, the nature and conditions of the properties, the past earnings record, and all circumstances that indicate whether or not the record is reliable criterion of future performance. We conclude this month with a discussion of expert evidence.
Automotive Insolvencies
December 22, 2006
The unique environment of the automotive industry has resulted in the insolvencies of tier-one and tier-two suppliers developing distinct characteristics. Unlike many industries, automotive suppliers typically have only a handful of customers, without whom they have no business to reorganize or sell in an effort maximize values for creditors. This gives customers significant control in the options a debtor has when faced with severe financial distress. However, because of Original Equipment Manufacturers' (OEM) just-in-time methods of production ' unlike customers in many businesses that can simply decide not to do business with an insolvent entity ' OEMs and large tier-one suppliers cannot purchase automotive parts or assemblies elsewhere.
Claims Trading Restrictions Dealt Setback
December 22, 2006
In recent years, debtors in large corporate bankruptcies have sometimes sought and obtained, in varying degrees, authority at the outset of bankruptcy cases for severe restrictions on trading in claims against the debtors by substantial claimholders. In practice, however, these debt-trading orders have chilled the market for trading in debt securities and served to entrench existing management by effectively precluding substantial investors from acquiring meaningful positions in the debtor's debt securities.
Fried Frank Set to Open Office in Hong Kong
December 12, 2006
Four years ago, it was the law firm merger everybody was talking about. Then it didn't happen. <br>Now the firm is turning its attention to Asia. It is set to announce today the opening of a Hong Kong office. Six partners recruited from British firm Simmons & Simmons, led by China region managing partner Huen Wong, will launch the office for Fried Frank. Another three from Simmons & Simmons, including China corporate head Stephen Mok, will come aboard early next year.
ERISA Amendments Effective Dec. 31
November 29, 2006
On Sept. 26, the Employee Benefits Security Administration of the Department of Labor (department) issued proposed regulations implementing amendments to ' 404(c) of the Employee Retirement Income Securities Act of 1974, as amended (ERISA).(The proposed regulations are at 29 CFR ' 550.404c-5.) These amendments were made by ' 624 of the Pension Protection Act of 2006 (the act) and provide relief to fiduciaries of participant-directed individual account plans where, in the absence of investment directions from a participant, the plan invests such participant's assets in a 'qualified default investment alternative.'
What Automatic Stay?
November 28, 2006
In last month's article, we stated that among the abuses of the bankruptcy system to be remedied by BAPCPA is that of serial filing. The purpose of this two-part article is to provide a brief overview of BAPCPA's new provisions in revised ' 362 of the Bankruptcy Code, to summarize the various issues examined by the courts to date, and to provide some practical recommendations from the perspectives of debtor or credit. We continue this month with a discussion of presumption.
Valuation Experts, Beware the Gatekeeper!
November 28, 2006
Valuation issues come into play throughout Chapter 11 business reorganization cases. These issues are frequently at the heart of the reorganization process and involve a wide variety of different matters. Bankruptcy courts determine value on a case-by-case basis and in light of the purpose and circumstances of the valuation.
