Post-petition Corporate Governance: Directing the Debtor from within and without (and the Fading Light of D&O Releases)
William J. Perlstein
WilmerHale LLP; Washington, D.C.
Ariel Levy
WilmerHale LLP; Washington, D.C.
When a debtor files for protection under chapter 11 of the Bankruptcy Code, the roles of its various constituent players change dramatically. Equity shareholders, who once held the reins in the pre-petition concern, are in many (but not all) cases forced to take a back seat in determining the future of the debtor, while creditors, who would have no such legal power in a solvent corporation, are given many governance rights, in some situations including the right to stand in the shoes of the post-petition going-concern for purposes of seeking relief against third parties.
This paper addresses the shifting corporate governance roles of equity and creditor bodies following a debtor-in-possession’s bankruptcy filing and the courts’ adjudication of equity and creditor rights to compel action by the debtor-in-possession. It will also discuss the courts’ gloss on director and officer releases purported to be given in confirmed plans of reorganization.
Read the full article. (Materials from the Views from the Bench 2006)
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