Also contributed by Sylvia Mayer and Manesh Jiten Shah.
Sylvia A. Mayer and Manesh J. Shah co-authored a paper for the 29th Annual Jay L. Westbrook Bankruptcy Conference, entitled “I Wish I May, I Wish I Might…File Chapter 11 Tonight: Authorization and D&O Considerations When Filing Chapter 11.” The paper explores several issues related to obtaining the proper authorization to file for chapter 11 relief and related challenges to such authorization. The authors highlight a recent, significant, ruling by the United States Bankruptcy Court for the Southern District of New York in which the court considered the authority of hundreds of special purpose entities, as part of a larger corporate structure, to file chapter 11 petitions. The paper also explores the fiduciary duties, and the strategic concerns, of directors and officers when considering a chapter 11 filing, including addressing issues specifically related to limited liability companies and partnerships.
To read the paper, follow this link.
Since submission of the article, additional decisions have been published confirming that an LLC agreement may modify, limit or extinguish the board or managing member’s fiduciary duties (See, e.g., In re Atlas Energy Resources, 2010 Del. Ch. Lexis 216 (Del. Ch. Oct. 28, 2010); Lonergan v. EPE Holdings LLC, 5 A.3d 1008 (Del. Ch. 2010)) and clarifying that the literal terms of the Delaware LLC Act effectively bars a creditor of an insolvent LLC from suing derivatively (See CML V, LLC v. Bax, 6 A.3d 238, *6-7 (Del. Ch. 2010)). And last week we blogged about a decision from the 10th Cir. BAP, which enforced a restriction in an LLC operating agreement that precluded the company from commencing a chapter 11 case.
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