Law Commons^™

Reward The Stalking Horse Or Preserve The Estate: Determining The Appropriate Standard Of Review For Awarding Break-Up Fees In § 363 Sales, Zachary Frimet

Zachary Frimet

Following the surge of bankruptcies in the wake of the Great Recession, a growing and somewhat controversial trend has emerged whereby companies seeking to purchase a debtor’s assets in bankruptcy frequently make use of Section 363 of the United States Bankruptcy Code (“§ 363”). In general, § 363 sales are accomplished via public auction. This aspect of § 363 exposes initial bidders, known in bankruptcy as “stalking horses bidders”, to the risk that they will commit time and resources in pursuit of the acquisition and yet fail to succeed as the prevailing bidder. To hedge against this risk, stalking horse …

Unexpected Gifts Of Chapter 11: The Breach Of A Director's Duty Of Loyalty Following Plan Confirmation And The Postconfirmation Jurisdiction Of Bankruptcy Courts, Daniel Bogart

Daniel B. Bogart

This article addresses the intersection of two aspects of chapter 11 jurisprudence: the fiduciary duties of directors and officers of the debtor and the post confirmation jurisdiction of bankruptcy courts. The article suggests that the normal application of fiduciary duties to confirmed debtors creates particular opportunities for directors and officers to act in a disloyal manner. The article examines two cases in particular. These include Bernstein v. Donaldson (In re Insulfoams, Inc.) and Cumberland Farms, Inc. v. Hasenotes (In re Cumberland Farms, Inc.) Traditionally, courts and commentators suggest that normal state fiduciary standards govern directors post confirmation. The article argues, …

Liability Of Directors Of Chapter 11 Debtors In Possession: 'Don't Look Back - Something May Be Gaining On You', Daniel Bogart

Daniel B. Bogart

This article addresses a series of important questions involving the fiduciary obligations and personal liability of bankruptcy trustees and directors of debtors in possession. The article begins by noting the uncertainty of lawyers representing directors of chapter 11 debtors. These lawyers must advise individual directors on their possible liability for decision making post petition. The article continues with a review of basic corporate governance of companies preceding and following the filing of a chapter 11 petition.

The article focuses on the content of the fiduciary obligations of care and loyalty of directors of the bankrupt companies. Supreme Court opinions indicate …