BLT: January 2018

 

Featured Articles

Business & Corporate

Recent Trends in Enforcement of Intercreditor Agreements and Agreements Among Lenders in Bankruptcy

Over the last several decades, the enforcement of intercreditor agreements (ICAs) that purport to affect voting rights and the right to receive payments of cash or other property in respect of secured claims have played an increasingly prominent role in bankruptcy cases. Although the Bankruptcy Code provides that “subordination agreement[s]” are enforceable in bankruptcy to the same extent such agreements are enforceable under applicable nonbankruptcy law, the handling of creditor disputes regarding such agreements has been inconsistent.1

Business & Corporate

Spotlight on In re Fair Finance Co., 834 F.3d 651 (6th Cir. 2016)

When the parties to a contract agree to alter the contract’s terms, the common law sometimes needs to classify the change as either an amendment or a novation, and this classification depends heavily on the intent of the parties. In this case, a trustee in bankruptcy convinced an appellate panel to indulge in unwarranted speculation about the parties’ possible intent to novate, thereby forcing a lender through a trial on the merits on whether its security interest should be avoided.

Business & Corporate

ESI Spoliation Sanctions: Assessing the Impact of the 2015 Federal Discovery Amendments

Two years ago this past December, substantive amendments to the Federal Rules of Civil Procedure took effect. The most significant of these changes were to address the behemoth that is e-discovery. This included the new Rule 26 “proportionality” standard designed to balance ever increasingly complex e-discovery with the needs of each particular case. Another key revision was to require discovery objections to be made “with specificity,” thus effectively killing off boilerplate objections.

Business & Corporate

Federal Deregulation Opens the Door for State-Level Threats to Auto Finance

A major legal transition is underway in the world of auto finance. As national regulators step back and federal law retreats, state regulators are stepping up. Changing market conditions are laying kindling for the regulatory and litigation fires to come. As a result, the auto finance industry may soon face serious legal threats from varied state regulators, particularly state attorneys general (AG individually or AGs collectively), many of whom appear poised to act.

Business & Corporate

Public Policy Prohibits Contractual Restrictions on an LLC’s Right to File Bankruptcy

Generally, public policy prohibits attempts to contract away the right to file bankruptcy, and a string of recent decisions confirms this principle in the context of limited liability company (LLC) operating agreements. In September, the U.S. Bankruptcy Court for the Eastern District of Kentucky held that provisions of an LLC operating agreement that were added incidental to the closing of a commercial loan served no purpose other than to frustrate the LLC’s ability to commence a bankruptcy case, and were thus unenforceable.

Business & Corporate

Corporate Governance and Information Gaps: Importance of Internal Reporting for Board Oversight

The evolution of corporate governance and board of directors’ responsibilities continues. Recent years’ actions of shareowner activist groups and securities regulators—and reports of shareowner votes in corporate annual meetings thus far in 2017—provide many indications of ongoing growth in public expectations for the roles and performance of corporate boards of directors.

Business & Corporate

A Blueprint for Family Business Succession Planning

When the owners of a family business ask their attorney to advise them with business succession planning, counsel should begin with an outline that summarizes the entire process but that divides it into distinct projects that progress toward construction of a comprehensive succession plan. With the clients’ help, counsel can then refine the outline to more accurately reflect their circumstances, needs, expectations, and vision.

Business & Corporate

FINRA Delays Required Collateralization of TBAs and Other MBS Forwards

On September 19, 2017, the Financial Industry Regulatory Authority, Inc. (FINRA) filed with the Securities and Exchange Commission (SEC) a proposed rule change to delay until June 2018 the implementation date of certain amendments to FINRA Rule 4210. When the amendments to Rule 4210 are implemented, they will require the collateralization of many forward transactions involving mortgage-backed securities (MBS).

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