BLT: December 2019

 

Featured Articles

Business & Corporate

The Ethics of Finance

In 2005, four years after Enron’s bankruptcy in 2001, but three years prior to Lehman’s bankruptcy in 2008, I proposed to the Financial Accounting Standards Board (FASB) the addition of a sixth standard financial reporting statement to be called the “Fair Value Statement.” The Fair Value Statement would have been in addition to the Balance Sheet, Income Statement, Statement of Comprehensive Income, Cash Flow Statement, and Statement of Stockholders’ Equity, which are authorized under FASB’s accounting standards codification. FASB did not act on this proposal.

Business & Corporate

Border Control: The Enforceability of Contractual Restraints on Bankruptcy Filings, Part 1

The Bankruptcy Code contains a number of so-called ipso facto provisions that invalidate contractual provisions triggered by the bankruptcy filing or insolvency of the debtor. Moreover, even where one of the ipso facto provisions is not applicable, courts have long held that it is contrary to federal public policy for a debtor to waive its right to seek relief under, or the protections set forth in, the Bankruptcy Code. Indeed, provisions prohibiting debtors from availing themselves of the bankruptcy laws—laws so seminally important that they were specifically authorized under the Constitution—are almost always deemed unenforceable.

Business & Corporate

Foreclosing FHA-Insured Mortgages in Ohio: Answers to Common Questions Posed in Contested Litigation

Lenders foreclosing FHA-insured mortgages in Ohio often face challenges that contest the lender’s compliance with relevant regulations from the U.S. Department of Housing and Urban Development (HUD). Like most courts throughout the nation, Ohio courts treat HUD regulations as contractual terms incorporated into FHA-insured mortgage loan documents. As Ohio case law on this issue continues to evolve, confusion—and sometimes shock—can arise for out-of-state lenders unfamiliar with the state-specific intricacies of litigating contested foreclosures involving FHA-insured mortgage loans in Ohio.

Business & Corporate

Arbitration Agreements with Class and Collective Action Waivers Do Not Violate the NLRA

On August 14, 2019, the National Labor Relations Board (the Board) issued a decision in Cordúa Restaurants, Inc. and Steven Ramirez and Rogelio Morales and Shearone Lewis, 368 NLRB No. 43 (2019), that reaffirms the status quo concerning the lawfulness of an employer’s ability to require its employees to waive their option to file or participate in class and collective actions. Relying heavily on Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), the U.S. Supreme Court decision that held that arbitration agreements with class and collective action waivers in the employment context are generally enforceable, the Board held that employers can lawfully prohibit employees from filing or participating in class or collective actions, including any that are pending, by requiring them to sign arbitration agreements containing class and collective action waivers.

Business & Corporate

Dodd-Frank 2.0: The Contours of the Policymakers’ Debate

We are now two years into the “reform” of Dodd-Frank, and although there has been unanimity on a number of issues, certain changes have drawn dissent. The pruning of certain aspects of the original regulations has been a goal of Federal Reserve Vice Chair Randal Quarles, who has been supported by the other Federal Reserve governors, except for Governor Lael Brainard on six matters. Similarly, for changes on which the Federal Deposit Insurance Corporation (FDIC) board has also issued its approval, support has been unanimous other than for Director Martin Gruenberg on five matters. This article analyzes these competing schools of thought.

Business & Corporate

In re PLX: A Morality Play for Our Times

In Re PLX Technology Inc. Stockholders Litigation[1] is not just another opinion out of the Delaware Court of Chancery: it is a parable that captures the zeitgeist of our modern activist epoch. The facts (as established by Vice Chancellor Travis Laster[2]) unfold like a morality play with a familiar and colorful cast of characters and caricatures—the opportunistic shareholder activist fixated on wringing out a quick profit, the exhausted board surrendering to the inevitable, the conflicted banker playing both sides, the complicit lawyers covering up bad process, and the powerful but perfunctory proxy advisors acting as kingmakers.

Business & Corporate

Before Moving to the Cloud, Invite the Lawyers to the Information Migration Party

If they have not already moved some of their information footprint to the cloud, most companies will soon enough. The cloud market is growing because the cloud provides “infinite” storage space for a company’s rapidly expanding information trove, but there are many compelling economic reasons as well. What is clear, however, is that migrating to the cloud—be it AWS, Google Cloud, or Microsoft Office 365—is replete with issues on which lawyers must weigh. Failure to engage the legal eagles upfront will result in unnecessary risk and exposure.

Business & Corporate

The Blockchain: A New Whistleblower Protocol

The term “whistleblower” was coined over three decades ago by a New York Times reporter and subsequently adopted by Ralph Nader to describe a Washington, D.C. conference wherein numerous papers were presented on the subject. Today, the whistleblower is a well-known term throughout the world; however, industries face new dilemmas as governmental or internal mandates increase the implementation of whistleblower systems for the reporting of misconduct.

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