November 15, 2015

Inside Business Law

This month’s “Inside Business Law” highlights the Business Law Section 2015 Fall Meeting to be held on November 20 and 21 at the Ritz-Carlton in Washington, DC, and provides summaries of the articles published in the fall 2015 issue of The Business Lawyer as well as several recently published Committee newsletters, with links to each. 

Upcoming Events
Fall Meeting

The Business Law Section 2015 Fall Meeting will be held November 20–21, 2015, at the Ritz-Carlton in Washington, DC. The Fall Meeting offers attendees:

  • Two full days of informative and substantive programming, including 10 CLE programs and over 30 meetings sponsored by the following Committees and Subcommittees:
    • Audit Responses
    • Business and Corporate Litigation
    • Corporate Compliance
    • Corporate Governance
    • Federal Regulation of Securities
    • Government Affairs Practice
    • Institutional Investors
    • Judges Initiative
    • Law and Accounting
    • Legal Opinions
    • Middle Market and Small Business
    • Professional Responsibility
    • Securitization and Structured Finance
  • The opportunity to hear from Andrew Ceresney, Director, Division of Enforcement, Securities and Exchange Commission, the keynote speaker at Friday’s Federal Regulations of Securities Luncheon (ticketed event)
  • Networking opportunities with other business law professionals at the Welcome Reception on Friday evening (free to all meeting attendees) and at one of two Committee dinners on Friday evening (ticketed events)

Those who wish to attend the Business Law Section 2015 Fall Meeting but have not registered in advance, can register in person at the Business Law Section Fall Meeting. 

Fall Reading
The Business Lawyer

The fall 2015 issue of The Business Lawyer, Volume 70, No. 4 was recently published by the Business Law Section. If you have not received your hard copy in the mail, you can access an electronic copy here. The fall 2015 issue includes the following articles:

Consequential Damages Redux: An Updated Study of the Ubiquitous and Problematic “Excluded Losses” Provision in Private Company Acquisition Agreements, by Glenn D. West.

“Excluded Losses” provisions are standard fare as exceptions to the scope of indemnification otherwise available for a seller’s breach of representations and warranties in private company acquisition agreements. While sellers’ counsel often defends these provisions as “market” and necessary to protect sellers from unreasonable and extraordinary post-closing indemnification claims, buyers’ counsel customarily accepts these provisions without much thought or on the basis that they have little choice but to accept them. West provides a practitioner’s perspective on the legal scholarship addressing the various types of damages, including “consequential” or “special” damages, “diminution in value,” “incidental” damages, “multiples of earnings,” and “lost profits,” in the context of indemnification provisions of private company acquisition agreements to better equip buyers’ counsel in responding to “excluded loss” provisions.

In Defense of the Bankruptcy Code’s Safe Harbors, by Mark D. Sherrill. 

Since its enactment, the U.S. Bankruptcy Code has seen a gradual and dramatic increase in the rights provided to non-debtor counterparties to derivatives contracts. In recent years, and especially following the financial crisis, many have been critical of the Bankruptcy Code’s safe-harbor provisions. Sherrill argues that the Bankruptcy Code’s safe-harbor provisions provide a net benefit to the United States in furtherance of Congress’s effort to balance competing national policies and, in doing so, rejects several leading proposals on how to narrow the safe harbors. 

Delaware Courts Continue to Excel in Business Litigation with the Success of the Complex Commercial Litigation Division of the Superior Court, by Joseph R. Slights III and Elizabeth A. Powers. 

Slights and Powers discuss the Delaware Superior Court’s Complex Commercial Litigation Division (CCLD) and its dramatic impact on the management of complex commercial litigation. The CCLD offers businesses a forum dedicated to the resolution of commercial disputes where equitable jurisdiction is lacking. The authors write that this forum has already earned the CCLD a reputation as a premier business court continuing Delaware’s status as the world’s most respected forum for adjudicating highly complex business disputes. 

Judicial Dissolution: Are the Courts of the State that Brought You In the Only Courts that Can Take You Out?, by Peter B. Ladig and Kyle Evans Gay. 

Ladig and Gay focus on the 2014 dissolution of Interstate General Media, LLC (IGM), the limited liability company that owned the Philadelphia Inquirer, the Philadelphia Daily News, and, to examine the jurisdictional considerations associated with judicial dissolution. The nearly simultaneous petitions for judicial dissolution filed by IGM in the Court of Common Pleas in Philadelphia and the Delaware Court of Chancery, respectively, left the courts to address the question of whether a Pennsylvania court could judicially dissolve a Delaware LLC. Ladig and Gay propose that the answer to this question should be clear, despite a split among the courts, by advocating the position that a court cannot judicially dissolve an entity formed under the laws of another jurisdiction because dissolution differs from other judicial remedies.

Business Lawyers Are in a Unique Position to Help Their Clients Identify Supply-Chain Risks Involving Labor Trafficking and Child Labor, by E. Christopher Johnson Jr.

The United States and other governments are enacting legislation to curb labor trafficking and child labor practices. The Southern Poverty Law Center and others in the plaintiffs’ bar are experiencing increased success in bringing suits against businesses allegedly engaging in illegal labor trafficking and child labor practices. To assist business lawyers in counseling their clients regarding supply-chain risks associated with labor trafficking and child labor, a working group of the ABA Business Law Section developed four principles to provide a risk-based compliance approach to identifying and navigating the human rights risks in supply chains. These principles, which have been adopted by the ABA House of Delegates, take into consideration the growing body of regulatory law to offer businesses a guide for complying with such regulations and avoiding compliance issue pitfalls. From a corporate social responsibility perspective, the principles justify a business case against labor trafficking and child labor economically, legally, ethically, and philanthropically.

Discipline Involving Multiple Disciplines – Protecting Innocent Executives in the Age of “Cooperation,” by James D. Wing and Andrew L. Oringer. 

The financial crisis of 2008–2009 continues to raise new business, financial, regulatory, and cybersecurity risks for corporations. These risks have become increasingly criminalized, with investigations and prosecutions directed at corporate directors and officers individually, as companies under investigation choose to “cooperate” with law enforcement. The authors analyze this “cooperation revolution” and its impact on white-collar criminal defense to highlight how it has altered three of the other most-affected areas of legal practice: corporate law, insurance law, and civil litigation. Wing and Oringer lay out the issues and suggest ways forward in light of developments in the insurance markets. 

The fall 2015 issue of The Business Lawyer also includes the following two surveys:

  • Survey – Uniform Commercial Code, by the Uniform Commercial Code Committee, ABA Business Law Section. The survey covers the most important developments in dealings with the Uniform Commercial Code for the past year, and is divided into the following eight sections: (i) sales, (ii) leases, (iii) payments, (iv) letters of credit, (v) documents of title, (vi) investment securities, (vii) personal property secured transactions, and (viii) international sales of goods. The survey is written by both professors and practitioners that work with the Uniform Commercial Code, with an emphasis on interesting judicial decisions as well as important legislative progress. The survey is limited to those developments that were deemed to have the most importance to a wide range of practitioners and educators.
  • Annual Survey of Judicial Developments Pertaining to Venture Capital, by the Annual Survey Working Group of the Jurisprudence Subcommittee, Private Equity and Venture Capital Committee, ABA Business Law Section. The survey covers judicial decisions from the past year that are significant for private equity and venture capital practitioners. 

Recent Committee Newsletters

A number of Committees have recently published newsletters, including the following:

The Commercial Finance Services and Uniform Commercial Code Committees’ joint Commercial Law Newsletter (August 2015) features the following articles:

  • Secured Lending to Series of LLCs: Beware What You Do Not (and Cannot) Know – Part II, by Norman M. Powell
  • Commitment Letters: Trends in Selected Provisions (March 1, 2014, through March 31, 2015), by Tim Fanning and Ikhlas Rashid
  • What’s Market: 2015 Mid-Year Trends in Large Cap and Middle Market Loan Term, by Kenneth M. Anderson, Stephanie Backes, Michael S. Goldman, Stephen M. Kessing and William Reindel
  • The Right to Credit Bid in Bankruptcy Sales Faces Renewed Challenges After the Supreme Court’s Radlax Decision, by Tim Brink

The August 2015 issue of Commercial Law Newsletter can be found here

The Corporate Governance Committee’s In Sight newsletter (October 2015) provides updates on recent developments in the following areas:

  • Securities and Exchange Commission recent rules, regulations, and enforcement actions
  • FASB Issues Exposure Draft Guidance on Assessing Financial Statement Disclosure “Materiality”
  • Delaware Law Developments – Recent decisions by the Delaware Court of Chancery, including disclosure-only settlements and the contractual good faith standard in conflict transactions
  • Trade Organizations – Recent comments issued by the Council of Institutional Investors, U.S. Chamber of Commerce, and the Business Roundtable
  • International Law Developments – Recent actions of the Ontario Securities Commission and the European Securities and Markets Authority

The September 2015 issue of the Director and Officer Liability Committee Newsletter, published by the Director and Officer Liability Committee, features the following articles and discussions:

  • A Brief History of the Director and Officer Liability Committee’s Efforts in Addressing the Issue of Criminalization of Director and Officer Legal Risk, by James D. Wing
  • The SEC’s New Proposed Dodd-Frank Clawback Rules: Mechanics and Risk Transfer, by Priya Cherian Huskins
  • ROUNDTABLE: Risks facing directors and officers, moderated by Carolyn Snow, Risk Management Society

The September 2015 issue of the Director and Officer Liability Committee Newsletter can be found here.

The third quarter 2015 issue of the Nonprofit Organizations Committee Newsletter, published by the Nonprofit Organizations Committee, features the following articles and updates:

  • Religious Organizations Subcommittee Update, by Sandy Greenfield and Brendan Wilson, Co-Chairs
  • Business Law Pro Bono: How Business Law Lawyers Contribute to Economic Justice, by Kimberly A. Lowe
  • National and State Updates for Nonprofit Organizations

The third quarter 2015 issue of the Nonprofit Organizations Committee Newsletter can be found here.

The fall 2015 issue of the White-Collar Crime Committee Newsletter, published by the White-Collar Crime Committee, includes the following articles:

  • 5 Ways to Meet DOJ’s Heightened Compliance Expectations, by Jonny Frank
  • Applying Newman’s Personal Benefit Requirement to Insider Trading Compliance Programs, by Marc D. Powers and Jonathan A. Forman
  • Key Lessons from the SEC’s FCPA Enforcement Action Against BNY Mellon, by Joseph Martini and Michael McGinley
  • State Regulators’ Dodd-Frank Enforcement Authority: Initial Suits and Their Implications, by Katherine Crispi