Does the Golden Share need to follow the Golden Rule?

Everyone, including the least empathic in our society (aka, lawyers), knows that we should seek to uphold the golden rule and “do unto others…” with respect to family, friends, and acquaintances, but does this also apply in the corporate world?  Apparently so, as a Delaware bankruptcy court just ruled that preferred shareholders with a bankruptcy-filing blocking right (also known as a “Golden Share”) must consider the effects on other shareholders and all other creditors when exercising such right.  This bench ruling departed from the path taken by the Fifth Circuit, which had concluded that a minority shareholder’s blocking right, as exercised, did not impose a fiduciary duty on the shareholder.  The Delaware court, in splitting from the Fifth Circuit, reasoned that federal public policy requires courts to look at what is in the best interest of all parties and prioritizes debtors’ constitutional right to file bankruptcy over the bankruptcy-filing blocking right explicitly granted in corporate governance documents.  Continue reading for our take on why this split is so noteworthy, particularly for shareholders considering whether to exercise a Golden Share: Delaware Bankruptcy Court Diverges from Fifth Circuit: Minority Shareholder’s Blocking Right Invalidated and Fiduciary Duty Imposed.

Original[s] Sin

The closing deadline is quickly approaching!  Which of the following two processes would you choose?  Would you:

(a) create a pdf of signature pages and request that parties provide a digital signature and return via email, or

(b) print out multiple sets of paper copies of each signature page for each transaction document in triplicate, then… ship each signature page packet to each signatory for the transaction (sending in tandem, an email with the overnight delivery tracking numbers) with a pre-addressed and prepaid return envelope and instructions to sign and return on a very tight timeline with no room for error, then…wait by the mailroom for those signature pages to come back.

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The Thoughts of (Chairman) Zell

I had the opportunity to interview Sam Zell last week on an iGlobal podcast. You can see it here. Fascinating.  Okay, Mr. Zell might not be the undisputed master of 1.4 billion souls whose thoughts are obligatory reading, but his Thoughts should be accorded considerable weight by us denizens of the US economy.  There’s a real difference between those who bloviate for a living (which would include me) and those who actually deploy capital based on their views and analysis of markets.  I’ll pay considerably more attention to the latter. Continue Reading

A Walk Down Memory Lane with the Liquidating Trust

One of the pleasures of life is re-encountering old friends, catching up on what’s happened while your lives have gone their separate ways, reminiscing about the good old days and reconnecting.  It comes back so fast, it’s like you never were apart.

Me and the Liquidating Trust had just such an experience the other day.

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LIBOR – The UK Beat Goes On

While it seems like the COVID pandemic has taken over every waking moment of our lives, the impending end of LIBOR marches ever onward.  All signs point to a termination date for the troubled benchmarks at the end of 2021, pandemic be damned.

The purpose of this post is not to discuss the road to transition so far, though if you’d like to take a trip down memory lane, here is what we have seen. Instead, we wanted to bring your attention to the fact that, whilst the UK Financial Conduct Authority’s (FCA) momentum continues, COVID has created some bumps in the road, even on the journey to the end of LIBOR.

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Rick Jones’ Interview with Law360

Last Friday, Law360 published its interview with Crunched Credit’s own Rick Jones as part of its Coronavirus Q&A series. In his interview, Rick discusses the effects COVID-19 has had on the commercial mortgage-backed securities market, reflects on how the current financial climate compares to that of the Great Recession, and contemplates the future of capital markets. If Rick’s blogs aren’t enough and you want to read more of his thoughts, you can find the interview here: Coronavirus Q&A: Dechert Real Estate Leader.

LIBOR: The Monty Python Parrot of Finance

COVID-19 has driven anxiety over the LIBOR transition right off almost everyone’s top-of-mind list and yet the crisis is taking no notice of that lack of regard and soldiering on.  The ARRC continues to beaver away, generating guidance and advice and otherwise proselytizing the need to get on with it and be ready for transition on January 1, 2022.

But are the markets listening?  Look at our ardor!  Except for special situations, the use of SOFR, to date, has been a political and not an economic decision for those who have elected to use it.  There is little take-up in the real world and little enthusiasm for doing so.  And what’s with the huge whoops a few weeks ago when SOFR’s March to the Sea was interrupted when the Fed backed off using SOFR in the Fed’s new $6 billion aid program for small and mid-size businesses?  Run away! Run away!  Back to LIBOR!

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COVID-19 and the Great Shutdown – Some Comparisons with the Great Recession

As we continue to do business in this new world, we have been working with clients to address some of the impacts of COVID-19 on their industries. One point of consideration that comes up is the unprecedented nature of the ensuing economic crisis on the real economy. As part of Dechert’s COVID-19 Coronavirus Business Impact Broadcast Series, Dechert global finance lawyers Jana Zupikova and Brandon Ovington speak to some of the key differences between the current “Shutdown” and the “Great Recession” that began in 2008; these will clearly have an impact on how we see businesses navigate the road to a post-Covid economy, and inform the legal solutions that clients may consider in addressing unprecedented challenges.

Oh TRO You Don’t . . .

In the latest installment of “Mezzanine Foreclosures in the Time of Coronavirus”, the Lender fired back at the Borrower’s injunction request, claiming that the Borrower had “squandered lifelines” thrown out to it over many months and that granting the stay would let the Borrower “benefit from a global crisis by evading the consequences of its own chronic failures, which pre-date COVID-19 by months, if not years”.  Governor Cuomo made another guest appearance, issuing a new Executive Order providing further restrictions on foreclosures the night before the Lender filed its brief.  Continue reading for our take on the saga so far: “Mezzanine Foreclosures in the Time of Coronavirus: Chapter 2”.

A Mayday on May Day . . .

Last week the New York Supreme Court answered an SOS from a borrower seeking a TRO to prevent a sale under the UCC in NYC that was scheduled to take place on May 1st.  For more information on this alphabet soup, read our OnPoint about new potential pitfalls for mezzanine lenders seeking to foreclose during the pandemic: “Mezzanine Foreclosures In The Time Of Coronavirus”

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