Articles

In "Decoding Director Liability: Unveiling the Complex Realities Beyond Legal Safeguards" by Kenneth A. Rosen, the article delves into the intricate landscape of corporate governance, challenging the assumption that legal protections fully shield board members from liability claims. Rosen explores the Model Business Corporation Act and Delaware law, highlighting the nuanced limitations directors face when relying on information and expert advice. The article emphasizes the need for heightened diligence, urging directors to be inquisitive, especially in transactions with potential insider benefits or significant financial implications. While legal protections provide financial insulation, Rosen underscores the intangible risk of reputational damage. Offering a guide for directors, the article goes beyond legal frameworks, advocating for a culture of caution and thorough scrutiny in the evolving realm of corporate governance.

In "Untangling Consignment Challenges: Lessons from the Sports Authority Bankruptcy," Kenneth A. Rosen dissects the complexities surrounding consignment arrangements, using the Sports Authority Chapter 11 case as a cautionary example for vendors. The article highlights the legal battles that ensued as Sports Authority sought to liquidate consigned goods, emphasizing the crucial need for vendors to understand and adhere to Uniform Commercial Code (UCC) requirements for consignment perfection. Rosen underscores the risks vendors face when engaging in disputes with key consignees, as seen in the Sports Authority case, where vital vendors refused to cooperate, hindering the possibility of a going concern sale. Despite a court ruling in favor of consignors, Rosen advises vendors to remain vigilant and consistently file UCC-1 forms to mitigate subjective risks. The article serves as a practical guide, offering recommendations for vendors to protect their interests and navigate the intricate landscape of consignment arrangements effectively.

Boeing's Board of Directors settled a Caremark claim lawsuit with shareholders for $225 million over the crashes of two 737 Max jetliners. The settlement highlights the consequences of neglecting risk oversight, emphasizing the shared accountability of board members in monitoring "mission critical" safety risks. The Delaware Court of Chancery's decision in the case underscores that directors may be held liable for a sustained failure in exercising oversight, especially regarding safety. The court found Boeing's board failed to prioritize safety during the development of the 737 MAX, leading to the settlement. The case signals a shift in director and officer liability, emphasizing the importance of proactive risk oversight, particularly in industries where safety is paramount.

When a property owner’s general contractor files for Chapter 11 bankruptcy, the owner cannot immediately terminate the contract based on a bankruptcy filing clause, also known as an ipso facto clause. Instead, the owner must apply to the bankruptcy court detailing the damages suffered due to the contractor’s delays and defaults. It’s recommended to seek legal counsel to navigate this process. The aim is to protect the owner’s rights and ensure all actions are within the law.

In this insightful exploration of timely debt collection, Ken A. Rosen draws on the enduring wisdom of the 1992 Barnhill v. Johnson Supreme Court decision, a legal cornerstone cited an impressive 807 times. Rosen illuminates the pivotal role of timing in the often arduous process of debt recovery, underscoring the urgency of proactive measures when sensing a customer's financial vulnerability. The article advocates for swift actions, including personally collecting checks or delegating trusted representatives, along with immediate deposits to preempt potential setbacks. Rosen further emphasizes the practicality of employing overnight couriers, demanding bank checks, or opting for wire transfers to fortify the collection process. By melding legal insight with pragmatic recommendations, Rosen guides businesses in safeguarding their hard-earned collections from unforeseen pitfalls, making this piece a valuable resource in the realm of debt management.

In the intricate landscape of corporate law, the principle of limited personal liability serves as a crucial foundation. This article explores the nuanced scenarios where this protection can be compromised, particularly in the realm of small-to-midsize and family-owned businesses. By examining potential pitfalls such as trust fund taxes, real estate transactions, credit card usage, unconventional loans, and misleading financial statements, the piece emphasizes the importance of proactive measures for owners, directors, and officers. With insights into the increasing prevalence of claims against officers and directors, the summary underscores the necessity for vigilant oversight and strategic decision-making. Ultimately, it calls for a comprehensive approach, urging stakeholders to prioritize diligence, transparency, and legal compliance to safeguard their assets in the face of financial challenges and insolvency.

This article explores the complexities of exculpation clauses in accounting malpractice, using the recent case BAK Advisors LLC v. Sax LLP as a focal point. The case highlights the importance of specific exculpation language, distinguishing between negligence and gross negligence. The court found broad exculpation clauses contrary to public policy, emphasizing the need for precision. Strategic timing of dismissal motions is crucial, as premature filings can be denied. The lessons from this case underscore the importance of refining exculpation clauses, considering state laws, and strategically approaching legal actions in the evolving landscape of financial restructuring.

The article, crafted by a Ken A Rosen, restructuring professional, addresses the increasing trend of companies holding intellectual property, especially trademark licenses, entering Chapter 11 due to the ongoing pandemic. The focus is on the strategic shifts in trademark license negotiations, with an emphasis on the rights of both distressed trademark licensors and licensee companies. The article explores the risks faced by companies heavily reliant on third-party trademark licenses and provides insights into protecting investments and navigating the complexities of Chapter 11. A key highlight is the emerging trend of companies choosing to renegotiate or sell trademark rights instead of outright rejection. The professional's diverse industry experience enriches the content with relevant case studies and examples. Overall, the article provides a comprehensive understanding of the evolving landscape of trademark license challenges in Chapter 11.

Updated by Ken A Rosen, a seasoned restructuring professional, provides comprehensive insights into successful hotel debt restructuring strategies in the aftermath of the COVID-19 pandemic. Emphasizing the importance of early and confidential communication with lenders, the article outlines key steps: presenting detailed financial plans, precise valuation, and demonstrating willingness to compromise. Additionally, it explores alternative options, including Chapter 11 considerations and state law variations. The overarching theme is the significance of credibility in negotiations, with lenders and judges more likely to cooperate when presented with a well-thought-out plan addressing macroeconomic challenges.

Ken A. Rosen, an experienced restructuring professional, provides a comprehensive article on presenting a Chapter 11 debtor's financial information to the bankruptcy court. In the aftermath of the COVID-19 pandemic, companies face challenges necessitating Chapter 11 for either orderly liquidation or restructuring. The article emphasizes the court's interest in understanding the factors precipitating bankruptcy and underscores the pivotal role of cash flow, advocating for a detailed monthly cash-flow statement. Beyond basic reporting, Rosen recommends a three-column presentation, detailing actual results, adjustments for extraordinary items, and restated financial results. This approach aims to offer a nuanced view of the debtor's core business performance, preventing misinterpretations. The article concludes by stressing the importance of providing a bridge to success, acknowledging the time required for implementing solutions and demonstrating viability. In essence, Rosen's article provides depth and insight into the intricacies of Chapter 11 restructuring, leveraging his expertise in the field.