On April 25, 2013, the U.S. Court of Appeals for the Second Circuit held that commentary on a work, its author or popular culture is not required for a secondary use of that work to be considered fair use under copyright law.
The IRS provided new guidance in an April 15, 2013 notice (the “Notice”) relating to the commencement of construction requirement for renewable energy projects eligible for either of two targeted tax credits.
James Sprayregen, Christopher Greco and Neal Donnelly authored this article regarding compensation of senior management for companies reorganizing under Chapter 11 of the U.S. Bankruptcy Code.
On February 12, 2013, President Obama signed a much-anticipated Executive Order on Improving Cybersecurity for Critical Infrastructure (the “EO”).
Issuers subject to the jurisdiction of the Securities and Exchange Commission (“SEC”), as well as, more broadly, many non-U.S. companies should be aware of the potential impact of the latest expansion of U.S. economic sanctions laws targeting Iran and other areas, such as international terrorism.
Joshua Simmons authored an article regarding developments in copyright and patent law.
David Horowitz and Paul Leaf authored this article about choice of law provisions.
A recent federal district court decision regarding ERISA controlled group liability constitutes a significant win for private equity, but complexities remain. Jack Levin, Jeffrey Quinn and Alexandra Mihalas authored this article.
Jamie Sprayregen, Anup Sathy, Josh Sussberg and Ryan Dattilo authored this article on the use of hybrid solicitation strategies to shorten Chapter 11 cases.
On Monday, October 15, 2012, the Federal Trade Commission (“FTC”) issued a complaint and proposed decision and order settling the case and imposing a remedy to address the alleged anticompetitive effects of Magnesium Elektron’s acquisition of Revere Graphics.
On October 9, 2012, the U.S. president signed an Executive Order, “Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions with Respect to Iran,” (the “Order”).
On September 25, 2012, NYSE and Nasdaq proposed rules to implement Dodd-Frank Act’s mandate that a listed company’s compensation committee consist entirely of independent directors and related matters.
Sarah Piepmeier co-authored this article describing Section 337 investigations involving intellectual property infringement before the International Trade Commission, focusing on patent infringement claims.
On September 6, 2012, the U.S. Court of Appeals for the Second Circuit held that an investor that purchased mortgage-backed securities in two shelf registration statement offerings had standing to litigate securities fraud claims on behalf of investors that purchased different securities in other offerings pursuant to the same shelf registration statement, but only to the extent the mortgages backing all of the securities were originated by the same mortgage lenders.
As part of the Jumpstart Our Business Startups Act (JOBS Act), Congress directed the Securities and Exchange Commission (SEC) to adopt rules to permit general solicitation or general advertising in offerings made under Rule 506 of Regulation D so long as all purchasers are “accredited investors.”
Carol Anne Huff and Elisabeth Martin authored this article regarding private equity fund agreements.
This issue includes the article “NDA Use Restrictions – Use With Caution,” which discusses a recent New York court finding that a “use restriction” in a confidentiality agreement prevented a private equity fund from pursuing an alternative transaction. Also featured is “U.S. Regulators Penalize Fund Advisers,” which shows how recent enforcement actions against private fund advisers arising out of violations of the U.S. Foreign Corrupt Practices Act and U.S. Iranian Transaction Regulations demonstrate the value of effective compliance programs.
The Senate Judiciary Committee yesterday held an hour-long hearing on President Barack Obama’s nomination of William J. Baer to be Assistant Attorney General in charge of the Department of Justice’s Antitrust Division (“DOJ”).
Jon Henes frequently writes on bankruptcy and finance for the CNBC Guest Blog.
Jay Lefkowitz authored this article regarding the U.S. financial crisis.
Much anticipated after statements this past May by the U.S. Department of State that U.S. sanctions targeting Burma would be lifted, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) authorized new investment in Burma, also known as Myanmar, on July 11, 2012.
Laurence Urgenson, Laura Fraedrich, Joanna Ritcey-Donohue and Paloma Zepeda authored this article on recent enforcement actions.
Laura Fraedrich authored this article regarding recent enforcement actions.
Partner Stephanie McCann and Stacee Hasenbalg, Associate General Counsel of BMO Financial Group, co-authored this article on business networking.
Adam Paul, Sarah Hiltz Seewer and Nora Tauke Schweighart authored this article regarding Chapter 11 protections for companies seeking refuge from mass tort liability.
This issue includes the article “JOBS Act Promises to Simplify IPO Process and Reporting Requirements for Emerging Growth Companies,” which discusses how changes to the IPO process and reporting and governance requirements for companies with less than $1 billion in revenue may make an IPO a more attractive exit strategy for qualifying portfolio companies. Also featured is “JOBS Act Reforms Reduce Regulatory Burdens on Private Offerings by Companies and Private Funds,” which describes how the JOBS Act reduces regulatory burdens on private placements by a company or private fund and raises the limit on the number of equity owners a company or private fund may have before it must become public.
Paul Wierbicki authored this article regarding distressed hospital M&A activity.
Chris Casamassima and Cormac Connor authored this article regarding developments in antitrust law.
James Sprayregen, Anup Sathy, Daniel Perlman, Jonathan Schechter, Chad Husnick and Steven Serajeddini authored this piece regarding real estate restructurings.
Daniel Wolf, David Feirstein and Joshua Zachariah discuss Material Adverse Effect provisions.
Granta Nakayama authored this article on environmental and energy policy.
Dale Cendali co-authored this article with Xiaoyan Zhang from Hogan Lovells regarding trademark litigation in China.
Daniel Wolf, Sara Zablotney and David Feirstein authored this article on the general implications of a spin-off on transformational corporate merger activity and certain structures that may allow for a combination of the two.
James Mutchnik and Micha Osgood authored this presentation for the International Bar Association's 2012 International Cartel Workshop.
James Sprayregen, Anup Sathy and Jon Zinman authored this article about certificateholders in commercial mortgage-backed security.
David Seligman and Brad Weiland authored this article regarding the Seventh Circuit's recent decision to uphold a secured lender's right to credit bid at an auction for a debtor's assets conducted as part of a Chapter 11 plan.
Michael Jones co-authored this op-ed piece regarding his work with the Coalition for Equity and Excellence in Maryland Higher Education.
Andrew Wright authored this article regarding the European sovereign debt crisis.
Paul Steadman, Matthew Hertko and Matthew Satchwell discuss the strategic implications of re-examination and review following approval of the America Invents Act.
Jon Henes discusses the Central Falls, Rhode Island bankruptcy case.
Jeff Rosen authored this article regarding government federal spending.
Jon Henes authored this article regarding potential tax increases in the U.S. government.
This issue includes the article “New Law Reshapes U.S. Patent Landscape,” which describes the new opportunities and pitfalls that are created by the America Invents Act relating to patent and technology portfolio management.
This issue includes the article “Proposed Jobs Act Taxes 100% of Carried Interest as Ordinary Income,” describing how the proposed American Jobs Act of 2011 would, if enacted, tax 100 percent of carried interest income earned by an investment professional as ordinary income.
Jonathan Henes discusses the Michael Lynch Memorial Foundation, an organization founded in memory of the brother of Masonite Corp. CEO Fred Lynch. Michael Lynch, a New York City firefighter, perished in the September 11, 2001 World Trade Center attacks.
Jon Henes authored this article regarding the need for a bold restructuring and recapitalization plan in Europe to sustain the Eurozone.
This issue includes the article “TIC Form SLT: First Reporting Deadline for Private Fund Managers,” which states how certain private fund managers must file Form SLT, the latest addition to the Treasury International Capital System, with the Federal Reserve Bank of New York by October 23, 2011.
Jon Ballis and Daniel Wolf co-authored this piece regarding trends in M&A law.
Jonathan Henes and Stephen Hessler authored this article regarding the Chapter 9 bankruptcy filing of Central Falls, Rhode Island.
In this issue of KirklandPEN brief, partners Daniel E. Wolf and Jon A. Ballis, P.C., discuss other tools dealmakers might use to shorten time required to complete the second step of a two-step takeover, thereby maximizing the time advantage offered by the tender offer structure.
Ken Adamo authored this overview of International Arbitration in the Intellectual Property Context.
Tender offers are commonly referred to as “two-step” transactions as a successful tender offer satisfying the minimum condition (i.e., the first step) is followed by a “back-end” merger which squeezes out the inevitable remaining target shareholders.
In the next step toward globalization of antitrust enforcement, the U.S. Department of Justice’s Antitrust Division and the U.S. Federal Trade Commission signed a Memorandum of Understanding with China’s three antitrust agencies intended to promote enhanced cooperation and communication among the antitrust enforcement agencies of the two jurisdictions.
On July 22, 2011, the U.S. Court of Appeals for the District of Columbia Circuit rejected a new Securities and Exchange Commission rule requiring a corporation to include in its proxy materials director nominees put forward by a shareholder (or group of shareholders) who have owned three percent or more of company stock for at least three years (the so-called “proxy access” rule). In another major blow to the SEC, the court said the SEC’s rule was “arbitrary and capricious” and that the agency had failed to properly weigh the economic consequences of the new regulations.
In this issue of Kirkland M&A Update, partners David Fox and Daniel E. Wolf discuss how during the course of early-stage negotiations, exclusivity provisions are often used to protect the time and economic investment being made in the potential transaction by ensuring that the counterparty deals only with the named party for a stated period. In a recent appellate decision in the First Circuit, the court applied a surprisingly narrow reading of the scope of what appeared to be a very broad exclusivity provision, offering a cautionary note to dealmakers as they draft such terms.
This issue includes the article “EU Alternative Investment Fund Managers Directive: Countdown to Implementation,” which reports that after repeated delays, the two-year countdown to implementation of the EU Alternative Investment Fund Managers Directive has begun. Also featured is “FTC/DOJ Announce Changes to HSR Rules and Notification Form,” which discusses the new changes to HSR premerger notification rules and form.
In a recent decision, River Road Hotel Partners, LLC v. Amalgamated Bank, No. 10-3597 (7th Cir. Jun. 28, 2011), the United States Court of Appeals for the Seventh Circuit declined to follow Philadelphia Newspapers. Instead, the Seventh Circuit upheld a secured lender’s right to credit bid at an auction for a debtor’s assets conducted as part of a chapter 11 plan.
Mark Cramer discusses the increased need for parties and their counsel to find efficient and effective ways to prove the substantive law of foreign countries.
This issue includes four articles discussing how the implementation in May and June of 2011 of the Dodd-Frank Wall Street Reform and Consumer Protection Act will significantly affect private fund managers: “Private Fund Manager—Final IA Registration and Exemption Rules Adopted with Registration Deadline Extended to March 30, 2012,” “Dodd-Frank Whistleblower Rules Adopted,” “Dodd-Frank Whistleblower Rules Adopted,” and “SEC Proposes ‘Bad Boy’ Disqualifications for Private Fund Offerings.”
Jonathan Henes and Stephen Hessler authored this article about the debate surrounding the possibility of amending the Bankruptcy Code to allow states to file for bankruptcy.
In this issue of Kirkland M&A Update, partners David Fox and Daniel E. Wolf discuss a recent decision by the highest court in New York that highlights once again the broad finality of a general release given in a transactional context, even in cases where significant fraud is subsequently alleged.
Three federal courts in New York and Los Angeles have recently held that the use of pre-existing photographs by “appropriation” artists did not fall within the “fair use” exception to copyright protection under Section 107 of the federal Copyright Act.
Jeanne Cohn-Connor discusses the bankruptcy process and how that process impacts environmental settlements.
David Higer authored this article regarding developments in patent law.
Ken Adamo authored this article regarding new rules for post injunction contempt proceedings.
On April 12, 2011, the Department of Health and Human Services’ Office of Inspector General (HHS OIG) notified Howard Solomon, the long-time CEO and Chairman of Forest Laboratories, a leading manufacturer of antidepressant pharmaceuticals, that it was contemplating initiating proceedings to exclude him from all federal health care programs. The notification came in the wake of Forest Laboratories’ civil and criminal settlement with the federal government.
Jon Henes authored this article regarding state pensions.
On April 27, 2011, the Supreme Court issued a landmark decision in AT&T Mobility LLC v. Concepcion, No. 09-893 (U.S. 2011), holding that arbitration agreements banning class actions are enforceable — even in jurisdictions that, as a matter of common law, deem such bans unconscionable. The decision curtails the ability of states to regulate arbitration agreements, placing greater emphasis on their plain terms.
Ken Adamo authored this article regarding trends in patent litigation.
This issue includes the article “UK Bribery Act 2010,” which reports that under the UK Bribery Act, which will take effect on July 1, 2011, a commercial organization, which includes corporations, LLPs and partnerships, commits an offense if a person “associated with” it bribes another person with the intention of obtaining a business advantage for the organization.
In this issue of Kirkland Governance Watch, the authors discuss the proposed rules that would establish independence requirements for both the compensation committee of a listed issuer’s board of directors and for any compensation consultants retained by such compensation committee.
Christopher Casamassima and Tammy Tsoumas co-authored this article regarding the Sherman Act and the Supreme Court's decision in Illinois Brick Co. v. Illinois.
In this issue of Kirkland M&A Update, partners David Fox and Daniel E. Wolf discuss the Supreme Court’s recent Matrixx decision, which offers issuers a number of practical steps to both reduce the risk of losing a stock-drop case and increase the likelihood of having such a case dismissed at the early pleading stages.
Daniel Wolf discusses how the use of CVRs will remain the exception rather than the norm.
Mark Mifsud authored this article regarding the strategic decisions that will be required by GPs.
Chiraag Shah and Sarah Klein authored this article regarding the UK Bribery Act 2011.
This issue includes the article “Version 2.0 of ILPA Private Equity Principles Reflects Change in Approach,” which states that the new version purports to reflect feedback from both LPs and GPs and expands upon the same themes as the earlier principles: alignment of interest, governance and transparency.
In this issue of M&A Update, partners Thomas W. Christopher and R. Scott Falk, P.C. discuss how the Chancery Court addressed the longstanding debate over “who ultimately decides whether a tender offer is adequate and should be accepted — the shareholders of the corporation or its board of directors.”
The number of secured high yield debt issu ances dramatically increased during the second half of 2009 and into 2010 as investors have sought the higher yields offered in the bond markets and issuers have sought access to capital in the face of continued tightness in the bank credit markets. The securities laws raise complications for companies registering secured debt and complying with inden tures governing secured debt.
Jon Henes authored this article regarding the need for a State Fiscal Task Force.
Gerald Nowak discusses legal ethics.
Daniel Wolf authored this article regarding the implementation of the public M&A version of earnouts, known as Contingent Value/Payment Rights (CVRs).
In this issue of M&A Update, partner Daniel Wolf discusses how the use of CVRs will remain the exception rather than the norm, with their primary utility being the facilitation of a focused dialogue around achieving a mutually acceptable present valuation for significant contingencies or binary outcomes.
The Federal Trade Commission (“FTC”) recently announced revisions to the Hart-Scott-Rodino (“HSR”) Act filing thresholds. The HSR Act requires annual adjustment of the jurisdictional thresholds based on the change in the U.S. gross national product. The thresholds will increase for 2011, unlike last year, when for the first time since the annual adjustments to the thresholds have been in effect, the thresholds decreased from the prior year.
Jon Henes authored this article about the advantages of allowing states to file for bankruptcy.
The tax laws enacted on December 17, 2010 (2010 Act) make drastic changes to the estate, gift, and generation skipping-transfer (GST) taxes.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss a recent Federal decision in California which, while certainly not the final word on this issue, provides important insight and guidance to companies considering adopting an exclusive jurisdiction bylaw and the potentially limited efficacy of such a provision.
In this article, the authors explain the implications of several recent decisions which illustrate how bankruptcy courts are addressing nocall provisions, the enforcement of makewhole claims, and related issues, such as the propriety of unsecured “dashed expectations.”
In the last week, news of search warrants and subpoenas for records relating to suspected insider trading has dominated the headlines. According to news reports, including in the Wall Street Journal, the SEC and U.S. Attorney’s Office for the Southern District of New York, working with the FBI, have been conducting insider trading investigations into securities trading by hedge funds, mutual funds and other financial institutions, and more investigations are underway.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss how dealmakers are finding that unique, and often quirky, provisions of state law in certain jurisdictions mean that caution and creativity are required to implement the tender offer structure for targets incorporated in those states.
Carol Anne Huff authored this article regarding secured high yield debt.
This issue includes the article “Harsh Excise Tax Imposed on Health Insurance Plans Favoring Executives over Rank and File,” which discusses how the recently enacted health reform legislation imposes harsh new excise taxes on any employer whose insured medical plan treats one or more executives better than rank-and-file employees. Also featured is “Test-Driving a Hybrid Go-Shop,” which reports that an interesting hybrid of the “go-shop” and “no-shop” techniques has emerged in some recent strategic deals that may be useful for private equity sponsored transactions.
David Fox and Daniel Wolf authored this article regarding trends in M&A Law.
This issue includes the article “Serious Flaws in Pending Carried Interest Tax Legislation,” which analyzes proposed Code §710. Also featured is “Two Additional Regulatory Changes Relating to Private Fund Managers,” which reports that, as placement agents seek to understand how the new rules will apply to them, private fund sponsors should consider how their engagement letters with placement agents allocate the risks arising out of this new regulatory environment.
Restrictions on a borrower’s ability to prepay secured debt obligations are a common feature of modern bond indentures and credit agreements. Lenders frequently employ “no-call” provisions to prevent borrowers from refinancing or retiring outstanding debt prior to maturity. Loan documents also may permit prepayment at the borrower’s option, but conditioned on the payment of a “makewhole premium” (often referred to as a “prepayment penalty”).
This Kirkland Alert discusses the 2011 dollar limits for employee benefit plans as announced recently by the Internal Revenue Service.
Jack Levin, Donald Rocap and William Welke authored this article regarding developments in tax law.
Joseph Schorer authored this article about the typical credit card agreement and the principal provisions of the CARD act.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss how a number of recent high-profile strategic deals have featured a new form of hybrid “go-shop”, combining the non-solicitation features of a “noshop” with the bifurcated termination fee of a “go-shop.”
On September 29, 2010, the Securities and Exchange Commission (SEC) issued a final rule amending Regulation FD to remove the exemption covering disclosures to rating agencies effective October 4, 2010. (17 C.F.R. 243.100(b)(2)(iii)). The amendment was mandated by Section 939B of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss how recent Delaware cases suggest that courts may apply a different yardstick in evaluating a target board’s satisfaction of its Revlon duties in a change of control transaction depending on whether the acquirer is a financial buyer or a strategic player.
Christa Laser authored this article on patent claim definiteness cases of the past decade.
On August 23, 2010, the State Department’s Directorate of Defense Trade Controls (DDTC) published its $42 million Consent Agreement with the private security firm formerly known as Blackwater Worldwide (“Blackwater”; n/k/a Xe Services LLC), settling claims for hundreds of International Traffic in Arms Regulations (ITAR) violations. This highly-anticipated civil settlement followed the State Department’s December 2008 imposition of a “presumption of denial” for all new applications for export licenses or other forms of authorization submitted by Blackwater, with limited exceptions for applications “in direct support of a U.S. Government contract.”
Joseph Schorer authored this article regarding the federal regulation of consumer credit.
Chapter 15 of the Bankruptcy Code provides for formal “recognition” of a foreign insolvency proceeding and for broad protection of a foreign debtor’s U.S. assets during a debtor’s foreign bankruptcy case. In particular, upon recognition of a foreign debtor’s insolvency proceeding as a “foreign main proceeding,” Chapter 15 provides for application of the U.S. Bankruptcy Code’s “automatic stay” provisions (sections 361 and 362 of the Bankruptcy Code) to the foreign debtor and to its U.S.-based property.
In this issue of Kirkland Governance Watch, the authors discuss the SEC recent adoption of new "proxy access" rules to facilitate the rights of shareholders to nominate candidates for election to a public company's board of directors. Subject to various limitations, the new rules require public companies to include nominees of certain significant and long-term shareholders in their proxy materials, thus providing these shareholders with an alternative to the more expensive and complex process of preparing and distributing their own proxy materials.
Jeffrey Rosen co-authored this article about recent government regulations.
Eva Davis authored this article regarding corporate social responsibility.
Eva Davis and Hamed Meshki co-authored this article about developments in the private equity market.
Based on a 2001 law, the federal estate tax and generation-skipping tax (GST) were repealed and the gift tax rate was decreased to 35% for 2010. Here’s how you can take advantage of both the decrease in the gift tax rate and the repeal of the GST tax.
James Sprayregen and Stephen Hessler authored this article regarding developments in bankruptcy related to the financial crisis.
On July 21, 2010, President Obama signed into law the “Dodd-Frank Wall Street Reform and Consumer Protection Act”. Virtually unnoticed among the sweeping financial regulatory reforms embodied in the statute were provisions squarely aimed at discouraging the use of “conflict minerals” in the manufacture of a wide array of electronic devices, including laptop computers, smart phones, digital cameras, and gaming consoles. Specifically, as detailed below, the Dodd-Frank Act mandates annual reporting to the U.S. Securities and Exchange Commission regarding the use of such minerals in manufactured goods and the efforts being undertaken by the manufacturer to exercise due diligence on the source and chain of custody of such minerals.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss how even careful drafting of "non-binding" language in a letter of intent may not be effective in avoiding unanticipated binding obligations if the parties' conduct, including in respect of the letter of intent itself, is inconsistent with those provisions.
In courtrooms across America, corporate defense lawyers argue how material submitted as evidence can be misleading, but never has that been so resoundingly proven as in the case of Shirley Sherrod. Michael Jones discusses the case.
Andrew Herman and Bernardo Piereck authored this article regarding lessons that M&A counsel can learn from the credit crisis.
In this issue of Kirkland Governance Watch, partner Thomas W. Christopher discusses the July 14, 2010, concept release launched by the SEC seeking public comment on the proxy system and asking whether the federal proxy rules should be amended. The Commission is considering changes to a number of important aspects of the proxy rules that would affect the voting of shares of public companies and the outcome of director elections and other matters subject to shareholder votes, such as mergers.
In this issue of Kirkland Governance Watch, partners Mark D. Director, Robert M. Hayward, P.C., Theodore A. Peto, Scott D. Price and Daniel E. Wolf discuss the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law on July 21, 2010. The Dodd-Frank Act is predominantly focused on the regulation and oversight of financial institutions. However, certain corporate governance provisions within the legislation will have a broad impact on most public companies (including non-financial institutions). This issue includes a chart that summarizes the key corporate governance requirements of the act.
In the wake of the June 9, 2010 adoption of United Nations Security Council Resolution 1929, on July 1, 2010, President Obama signed into law H.R. 2194, the “Comprehensive Iran Sanction, Accountability, and Divestment Act of 2010” (“CISADA”), which had been approved by both the U.S. House of Representatives and the U.S. Senate on June 24, 2010 by overwhelming majorities of 408 - 8 and 99 - 0, respectively. The legislation principally expands the scope of the Iran Sanctions Act (“ISA”) to more effectively target persons, including non-U.S. entities, engaged in activities relating to the Iranian petroleum sector.
This issue includes the article “SEC Registration For Non-U.S. Managers — It’s Happening!” which reports that the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law today, requires managers of private funds, including non-U.S. fund managers with U.S. investors, to register with the SEC as investment advisers.
James Sprayregen, Ted Freedman and Adam Paul authored this article regarding developments in bankruptcy law.
On July 6, 2010, the Environmental Protection Agency (“EPA”) released its proposed Transport Rule1 which would replace the EPA’s Clean Air Interstate Rule (“CAIR”).2 The proposed Transport Rule is expected to be finalized in the late spring of 2011 and would require 31 eastern states and the District of Columbia to reduce power plant emissions that contribute to ozone and fine particle pollution in other states.
The "waterfall computer program" that the Securities and Exchange Commission (SEC) proposes to require could leave the asset-backed securities market foundering. The SEC seems to have little appreciation for the substantial difficulty, significant cost and unsettling potential liability this waterfall requirement would impose.
In this issue of Kirkland M&A Update, partners David Fox, R. Scott Falk, P.C., and Daniel E. Wolf discuss why recent court proceedings and settlements relating to top-up option claims offer dealmakers a few practical pointers to reduce litigation risk in tender offers.
In this KirklandPEN brief, we discuss how the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by the House on June 30 and currently under consideration by the Senate (the "Dodd-Frank Act"), imposes significant new requirements on private funds that use derivatives. Although the Dodd-Frank Act provides exemptions for certain operating companies that use swaps to hedge commercial risk, most "financial entities," such as private funds, will be required to trade "standardized" swaps (e.g., interest rate swaps, equity swaps and currency swaps, unless currency swaps are later exempted by the U.S. Treasury) on an exchange and submit them to a clearing entity.
On June 30, 2010, the U.S. House of Representatives passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. In mid-July, the U.S. Senate is scheduled to consider, and is likely to approve, this legislation, which President Barack Obama is expected sign into law shortly thereafter.
This issue includes the article “SEC Adopts Rule Prohibiting ‘Pay to Play’ for Investment Advisers, their Principals and Employees, Including Private Fund Managers,” which discusses the rule prohibiting “pay-to-play” practices for virtually all SEC registered and unregistered investment advisers and many of their employees.
Ever since the Supreme Court of the United States granted writ of certiorari in Bilski v. Kappos, No. 08-964, the question on many patent professionals’ minds has been whether the Court would uphold the Federal Circuit’s “machine-or-transformation” test. In this distribution, we will take you through the claims at issue in Bilski v. Kappos, explain the Court’s holding, and discuss how the Court’s holding may be applied.
In this issue of Kirkland Governance Watch, partners Mark D. Director, Robert M. Hayward, P.C., Theodore A. Peto, Scott D. Price and Daniel E. Wolf discuss the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was resubmitted to conference representatives of the House and Senate this week and is anticipated to be signed into law in early July. This issue includes a chart that summarizes the key corporate governance requirements of the act.
Lee Ann Stevenson authored this article regarding cost-effective litigation strategies.
The media coverage surrounding passage of the Patient Protection and Affordable Care Act of 2010 (as amended by the Health Care and Education Reconciliation Act of 2010) (the “Act”) largely focused on the impact on the insurance industry. However, within the Act’s more than 900 pages are more than 32 sections related to healthcare fraud and abuse and program integrity. These provisions make significant amendments to existing criminal, civil, and administrative anti-fraud statutes, including significant amendments to the Anti-Kickback Statute and False Claims Act.
Lee Ann Stevenson and Vickie Reznik authored this practical guide to dispute resolution.
In this KirklandPEN brief, partners Jack S. Levin, Donald E. Rocap, William R. Welke, P.C. and Paul D. Patrow discuss the revised carried interest bill, currently being considered by the U.S. Senate, which would treat a portion of the carried interest net income of an investment professional as compensation ordinary income beginning January 1, 2011.
This issue includes the article “House-Senate Conference Committee Agrees: Large Private Equity Fund Managers Must Register as Investment Advisers,” which reports that a House-Senate Conference agreement is expected to require private equity fund managers with $150 million or more AUM to register with the SEC as investment advisers by July 2011.
A recent Delaware Chancery court decision shows that, absent cautious drafting, parties may be releasing more than anticipated when executing a customary general release. In this issue of M&A Update, partners David Fox and Daniel Wolf discuss this decision and its implications in the transactional context.
David Fox and Daniel Wolf discuss increased sensitivity around issues of conflicts of interest for financial advisors.
The Environmental Protection Agency (“EPA”) recently provided its final rule1 to implement its regulation of greenhouse gas (“GHG”) emissions for stationary sources under the Clean Air Act (“CAA”).The final rule sets a significantly higher threshold for the amount of GHG emissions from a source that will initially trigger regulation than the proposed rules (75,000 tons/year v. 25,000 tons/year). Unfortunately, there is still no clear guidance or standard for the technology that regulated GHG emissions sources will need to utilize to control GHG emissions.
In a significant en banc decision issued on June 2, 2010, Jeld-Wen, Inc. (f/k/a Grossman’s Inc.) v. Van Brunt (In re Grossman’s, Inc.), Ch. 11 Case No. 09-1563 (3d Cir. June 2, 2010), the U.S. Court of Appeals for the Third Circuit reversed itself and joined with other circuit courts in holding that that “a ‘claim’ under section 101(5) of the Bankruptcy Code arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury which underlies a ‘right to payment’ under the Bankruptcy Code.”
In this KirklandPEN brief, partners Jack S. Levin, Donald E. Rocap, William R. Welke, P.C. and Paul D. Patrow discuss the carried interest bill currently being considered by the U.S. Senate, which would tax carried interest from an investment services partnership/LLC at effective rates slightly reduced from the bill passed by the House of Representatives on May 28, 2010.
In this KirklandPEN brief, partners Jack S. Levin, Donald E. Rocap, William R. Welke, P.C. and Paul D. Patrow discuss the carried interest bill recently passed by the House of Representatives, which will tax a portion of net carried interest from an investment services partnership/LLC as ordinary compensation income beginning January 1, 2011.
In this issue of M&A Update, partners David Fox, Thomas Christopher and Daniel Wolf discuss why a recent Delaware Chancery Court decision has raised substantial doubts as to the applicable standard of judicial review for freeze-out transactions where a "controlling" parent seeks to acquire the shares held by the public minority. As a result of the decision, parties structuring these transactions will face significant uncertainty as to the standard of judicial review and the likely path and outcome of deal-related litigation until the Delaware Supreme Court resolves this controversial issue.
On May 4, 2010, the United States Environmental Protection Agency (“EPA”) announced a Notice of Proposed Rulemaking (“NPRM”) under the Resource Conservation and Recovery Act (“RCRA”) regarding the regulation of fly ash, bottom ash, boiler slag and flue gas desulfurization wastes destined for disposal (collectively, coal combustion residuals (“CCRs”)). Proposing two alternatives, EPA is currently soliciting comments on whether CCRs generated by electric utilities and independent power producers should be regulated under subtitle C of RCRA or subtitle D of RCRA.
This issue includes the article “Senate Financial Services Reform Bill - Effect on Private Fund Managers,” which reports that the recently passed Senate Financial Services Reform Bill is significantly different than the House bill approved in 2009 and includes a potentially broadened exemption from federal investment adviser registration for private equity and venture capital fund managers.
This issue includes the article “Taxation of Carried Interest as Ordinary Income,” which describes how the recently unveiled carried interest bill will, if enacted, tax a portion of carried interest net income earned from an investment partnership or LLC as compensation income subject to ordinary income tax and uncapped Medicare tax.
Andrew Dunlap and Katherine McDaniel authored this article regarding developments in class action settlement agreements.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss why a recent Delaware Chancery bench decision from VC Laster denying a motion for a preliminary injunction to block the merger of Zenith National with Fairfax Holdings suggests increased sensitivity around issues of conflicts of interest for financial advisors.
Jeffrey Rosen, Patrick Groomes and Michael Cohen authored this article regarding permanent federal credit and loan guarantee programs.
In this issue of M&A Update, partner Thomas W. Christopher discusses the recently issued decision by the Delaware Supreme Court in the Crown Emak Partners LLC v. Kurz case, which both affirmed and reversed in part the earlier decision of the Delaware Chancery Court in Kurz v. Holbrook.
In this issue of M&A Update, partners David Fox and Daniel Wolf and associate Joshua Zachariah discuss purchase price adjustments, and explain why, while their appeal is indisputable, they are often subject to post-closing disputes. One of the drivers of these disputes is inattention to the details of drafting the adjustment provisions, often exacerbated by the fact that these clauses straddle the realm controlled by the legal practitioners and that managed by the financial and accounting experts.
The SEC's Rule 17g-5 under the Securities Exchange Act of 1934 addresses conflicts of interest that the SEC believes affect debt ratings issued by nationally recognized statistical rating organizations, or NRSROs. Rule 17g-5, which we call the Ratings Conflict Rule, identifies potential conflicts and specifies how those conflicts are to be managed. Some conflicts are simply prohibited, such as the ownership by a rating agency employee of securities of an issuer for whom the employee has responsibility. Other conflicts are permitted so long as the NRSRO makes suitable disclosure in SEC filings or manages the conflict appropriately.
This issue includes the article “What to Do After Receiving a Subpoena from the SEC’s Division of Enforcement” which states that, given the SEC Enforcement Division’s increased focus on private funds, a private fund and its employees should be familiar with the important initial steps to be taken upon receipt of an SEC subpoena.
Stephen Fraidin and Stefanie Wool co-authored this article regarding special committee law.
On March 18, 2010, United States Environmental Protection Agency (“EPA”) issued a Federal Register notice announcing a meeting of the Science Advisory Board on April 7-8, 2010.1 The Science Advisory Board will be “commenting on EPA’s proposed approach to study the potential public health and environmental protection issues that may be associated with hydraulic fracturing.” That same day, EPA also announced that it will conduct a $1.8M study of the impacts on water quality and public health associated with hydraulic fracturing.
On March 18, 2010, the Federal Energy Regulatory Commission (“Commission”) released a new Policy Statement on Civil Penalty Guidelines in Docket No. PL10-4-000 (“Policy Statement”) for violations of the Commission’s statutes, rules, regulations, restrictions, conditions, or orders. The intended purpose of the Policy Statement and the new guidelines attached thereto (“Penalty Guidelines”) is to add fairness, consistency, and transparency to civil penalty determinations.
This issue includes the article “Update on Financial Services Reform for Private Fund Managers,” which reports that the financial services reform legislation proposed by Senator Dodd and approved by the Senate Banking Committee includes a potentially broadened exemption from federal investment adviser registration for private equity and venture capital fund managers.
In this issue of M&A Update, partner Daniel E. Wolf and associate Joshua M. Zachariah discuss why the recent uptick in implementation of poison pills means boards and their advisers should pay close attention to the details and mechanics of the pill, which may prove decisive in whether the outcome will match the board's expectations.
This issue includes the article “House and Senate Enact Medicare Tax Increases,” which states that the healthcare and healthcare reconciliation bills increase Medicare taxes for high-income individuals, including a 3.8 percent Medicare tax on investment income. Also featured is “New Legislation Expands U.S. Tax Withholding on Payments to Non-U.S. Persons,” which reports that legislation signed last week by President Obama was designed to prevent U.S. citizens and residents from avoiding U.S. taxes by hiding ownership of U.S. assets in financial institutions located in tax-haven jurisdictions or safe haven countries.
This issue includes the article “SEC’s Division of Enforcement: Changing Landscape for Private Equity,” which discusses the Division of Enforcement’s biggest reorganization in decades, suggesting that the private equity community should prepare for increased scrutiny.
Partners David Fox and Daniel Wolf discuss new trends in deal protection provisions.
In a February 22, 2010 letter to several Senators (“Feb. 22 Letter”), the Environmental Protection Agency (“EPA”) set forth its timeline for the implementation of regulations for greenhouse gas (“GHG”) emissions. The EPA intends to use its existing authority under the Clean Air Act to regulate the emission of GHGs beginning in 2011. While the Feb. 22 Letter lacked specific details regarding many items of importance to industry and other stakeholders, it does provide a clear roadmap of the EPA’s plan and timing for regulating GHGs.
In this issue of M&A Update, partner Thomas W. Christopher discusses the recent decision by the Delaware Chancery Court, which addressed director reduction bylaws, expanded the definition of "stockholders of record" to include DTC participants and set forth principles for analyzing whether a particular transaction involves illegal vote buying.
Laurence Urgenson, Samuel Williamson and Audrey Harris authored this article regarding developments at the Department of Justice.
This issue includes the article “Break-Up Fee Denied for Stalking-Horse Bidder in Bankruptcy Asset Sale,” which reveals how a federal appeals court recently upheld the denial of a break-up fee for a stalking-horse bidder whose bid was not conditioned on court approval of the break-up fee, illustrating the importance of carefully structured bids and purchase documentation.
Chapter 11 debtors often sell all or part of their assets pursuant to section 363 of the Bankruptcy Code. These bankruptcy sales typically involve an auction process that uses an initial or “stalking horse” bidder to set the minimum price and other transaction terms against which other bidders bid. To compensate the stalking horse bidder for the time and money invested in formulating the transaction, providing a “floor” price, and establishing the potential terms for higher and better offers, the bidder is often awarded a court-approved break-up fee and expense reimbursement in the event it is outbid at auction.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss why recent takeover battles are bringing into question the continued vitality of the "just say no" defense, which allows boards of directors of target companies to combine refusal to negotiate and an unwillingness to waive structural defenses (such as a poison pill or Section 203 of the Delaware corporate code) to frustrate advances from unwanted suitors.
On January 21, 2010, the United States Sentencing Commission issued a notice of proposed amendments to the United States Sentencing Guidelines (“Guidelines” or “USSG”) and to its commentary regarding the sentencing of organizations. In large part, the proposed amendments would add requirements for an effective compliance and ethics program a corporation must meet in order to receive a reduction in its fine under the Guidelines.
Lee Ann Stevenson authored this article regarding specificity when describing alleged trade secrets.
James Sprayregen and David Agay authored this article regarding developments in international restructurings.
Margaret Gibson and Waldemar Colón authored this article discussing why private equity managers are showing increased interest in the Small Business Investment Company (SBIC) program.
This issue includes the article “Financial Services Reform for Private Fund Advisers — Where are We?” which discusses how several proposed elements of the Private Fund Investment Advisers Registration Act of 2009 could have a significant impact on private funds and their managers.
This issue includes the article “Earnouts — A Siren Song?” which outlines a few recent cases that highlight the sobering reality that earnouts, despite offering an appealing alternative to the typical “split the difference” compromise, are frequently recipes for future disagreements regardless of the time and care expended on their creation.
James Sprayregen, Christopher Marcus, David Agay and Benjamin Steele conclude their article about the recent turn in the credit cycle.
Kirk Radke authored this article regarding developments in the private equity market.
David Fox and Daniel Wolf co-authored this article regarding trends in M&A law.
On January 15, 2010, Judge Shira Scheindlin of the Southern District of New York issued an extensive opinion holding that companies may be presumed to have spoliated evidence if they did not take certain steps in preserving or collecting documents. Pension Comm. of the Univ. of Montreal Pension Plan, et al., v. Banc of Am. Sec., LLC, et al., No. 05-9016 (S.D.N.Y. Jan. 15, 2010) (“Pension Committee”). While the opinion is not precedential outside of Judge Scheindlin’s court, it is likely to be persuasive in other courts, as Judge Scheindlin wrote the influential Zubulake opinions and is a leading authority on electronic discovery issues.
The U.S. Securities and Exchange Commission’s Division of Enforcement is currently undergoing what has been called the “biggest reorganization in at least three decades.” Promising a Division that is strategic, swift, smart, and successful, Director Robert Khuzami has articulated a bold new agenda and implemented sweeping structural changes.
Last week, the U.S. Department of Justice (“DOJ”) brought a federal antitrust lawsuit against both Smithfield and Premium, challenging not the 2007 combination itself but rather the parties’ conduct prior to receiving HSR clearance. The case was simultaneously settled, with the companies agreeing to pay a total of $900,000 in fines. According to Assistant Attorney General Christine Varney: “Merging companies must remain independent in their ordinary business operations, including purchasing decisions, until the end of the premerger waiting period.”
David Fox and Daniel Wolf co-authored this article regarding trends in M&A law.
The Federal Trade Commission ("FTC") recently announced revisions to the Hart-Scott-Rodino ("HSR") Act filing thresholds. The HSR Act requires annual adjustment of the jurisdictional thresholds based on the change in the U.S. gross national product. For the first time since the annual adjustments to the thresholds have been in effect, the thresholds will decrease from the prior year.
Based on a law passed in 2001, the federal estate tax and generation-skipping tax (GST) were repealed and the gift tax rate was decreased from 45% to 35% for 2010. Unfortunately, these changes are only temporary. Unless Congress changes the law, the gift, estate and GST tax laws that were in effect back in 2001 will be reinstated on January 1, 2011, at higher rates and reduced exemptions than existed in 2009. Congress may act to reinstate the taxes in 2010 retroactive to January 1, 2010, but no one knows what Congress will do.
On January 19, 2010, the U.S. Department of Justice unsealed the indictments of 22 executives and employees in the military and law enforcement products industry, signaling a new era in Foreign Corrupt Practices Act enforcement.
The year 2009 was marked by notable changes to the FTC’s Endorsement Guides, and those changes are now in effect.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss why earnouts, despite offering an appealing alternative to the typical "split the difference" compromise, are frequently mere recipes for future disagreements regardless of the time and care expended on their creation.
This issue includes the article “The SBIC Program — An Alternative Source of Capital for Private Investment Funds,” which reports that recent regulatory enhancements demonstrate the government’s commitment to the Small Business Investment Company program, providing qualified fund managers with access to government guaranteed financing at favorable rates.
In a January 8, 2010 speech in West Palm Beach, Florida — described in the speech as “ground zero” for Bernard Madoff ’s $65-billion Ponzi scheme — U.S. Attorney General Eric Holder labeled financial fraud “one of the most glaring threats” facing the U.S. economy. Attorney General Holder drew further on national security and terrorism themes to emphasize the priority the Department of Justice will give to investigating and prosecuting financial fraud.
Jon Henes authored this article about recently retired bankruptcy judge Prudence Carter Beatty.
James Sprayregen, Christopher Marcus, David Agay and Benjamin Steele co-authored this article about the recent turn in the credit cycle.
In this issue of Kirkland's M&A Update, partners David Fox, Kirk A. Radke and Daniel Wolf discuss the recent Delaware courts decision that includes important information for dealmakers in two key areas that are often in play in competitive bidding situations.
David Fox, Kirk Radke and Daniel Wolf co-authored this article regarding a recent decision in the Delaware courts that includes important information for dealmakers in two key areas that are often in play in competitive bidding situations.
In this issue of Kirkland Governance Watch, partners Robert M. Hayward, P.C., and Theodore A. Peto discuss how the SEC's recent adoption of rules aimed at increasing corporate accountability will require companies to address new disclosures in proxy and information statements.
In this issue of Kirkland Brief, partners Lisa Cawley, Scott A. Moehrke, P.C. and Stephanie Biggs discuss new developments affecting European private equity fund managers in relation to both the EU Alternative Investment Fund Managers Directive and the U.S. Private Fund Investment Advisers Registration Bill.
The Internal Revenue Service released final regulations in late November relating to employee stock purchase plans (ESPPs) intended to qualify under Section 423 of the Internal Revenue Code. The final regulations contain a rather unusual quirk regarding the identification of the “grant date” of “options” issued under an ESPP.
This issue includes the article “Taxation of Carried Interest as Ordinary Income Passes House,” which reports that the House-passed Tax Extenders Act of 2009 would tax as ordinary compensation income carried interest earned from investment partnerships or LLCs.
David Callahan, Aaron Charfoos and Elizabeth Nemo co-authored this article on trends in intellectual property law.
In this issue of Kirkland's M&A Update, partner Daniel Wolf discusses how a recent Delaware bench decision on a motion for a temporary restraining order offers a timely reminder of potential pitfalls for parties entering into letters of intent or term sheets with the expectation that they merely represent an unenforceable "agreement to agree."
David Handler authored this article regarding developments in estate tax law.
The U.S. District Court for the Northern District of Illinois (“N.D. Ill.”) has one of the largest patent dockets in the country and, on October 1, 2009, joined the growing list of federal district courts to adopt local patent rules.
The District Court for the Eastern District of Pennsylvania, in In re Philadelphia Newspapers, LLC, 2009 WL 3756362 (E.D. Pa. Nov. 10, 2009), recently ruled that debtors can preclude credit bids in asset sales conducted pursuant to a chapter 11 plan (not pursuant to section 363), where secured creditors receive the “indubitable equivalent” of their claims.
This issue includes the article “Increase in Insider Trading Enforcement Affecting Private Funds,” which discusses how, in light of today’s emboldened enforcement environment and recent media attention garnered by high-profile insider trading cases, it is increasingly important for private equity firms and hedge funds to implement strong compliance programs.
Partha Kar authored this article about the legal and commercial risks that buyers should be aware of when purchasing the business of an insolvent company.
The FCPA broadly prohibits companies from giving anything of value to a foreign official in order to obtain a business advantage, which can include merely acquiring market intelligence. As pharmaceutical companies do increasing business abroad, they face a substantially greater risk of becoming targets of FCPA investigations and prosecutions.
The Internal Revenue Service has announced the 2010 dollar limits for employee benefit plans.
In this issue of M&A Update, partners David Fox and Daniel Wolf discuss new trends in deal protection provisions.
Robert Pommer authored this article about the potential ramifications of the U.S. Court of Appeals for the First Circuit's decision in United States v. Textron, Inc.
Eva Davis authored this article regarding trends in the private equity fund market.
In this issue of Kirkland Governance Watch, partners Daniel Wolf and Robert M. Hayward, P.C., and associate Raymond F. Bogenrief discuss how recent revisions to the policies of SEC staff and RiskMetrics may create pitfalls in the 2010 proxy season.
Richard Watkins, Michael Belsley, Mark Mifsud and Kate Downey contributed to the 2009 Financier Worldwide e-book.
Laurence A. Urgenson, Christopher Colbridge, Audrey Harris and Samuel Williamson co-authored this article.
Russell Levine, Christopher Liro and Breana Smith authored this article regarding rules for universities granting patent licenses.
In this issue, partner Daniel Wolf focuses on the importance of wording in engagement letters for advisory services, and conduct during the time advice is being offered, in preserving advisory expectations and mitigating adviser liability.
This issue includes the article “Some Tender Offer Quirks,” which states that, in considering a tender offer, sponsors should be aware of a number of quirks that have come to light in recent tender offer transactions that may impact or offset its advantages. Also featured is “ILPA —Private Equity Principles," which discusses the ILPA’s recently published “Private Equity Principles,” which outlines the trade group’s “wish list” for private equity fund terms.
In this issue of Kirkland M&A Update, partners David Fox, Daniel Wolf and Jay Ptashek discuss how the specific terms, words and structure of "change of control" and "anti-assignment" clauses in company agreements and the M&A documents that implicate them can go a long way toward facilitating the ultimate success of a future deal.
Jon Henes and Josh Sussberg co-authored this article regarding restructuring in the media sector.
Mark Lillie and Joseph Piech authored this article about price gouging legislation.
A bankruptcy court may reward a party that makes a “substantial contribution” to a chapter 11 case by ordering the debtor to pay the party’s fees and expenses incurred in making that contribution. A recent ruling by the Delaware bankruptcy court illustrates the difficulty of obtaining a substantial contribution claim.
Many companies are devoting substantial resources to developing environmentally friendly, or “green,” technologies. As they make new discoveries, many are seeking worldwide intellectual property protection for these new technologies.
In this issue of M&A Update, partners David Fox, Daniel Wolf and Susan J. Zachman discuss a number of quirks that have come to light in recent tender offer transactions and explain why practitioners should be aware of them.
In this issue of Kirkland's M&A Update, partners David Fox and Daniel Wolf discuss how perceived departures from traditional deal structures are largely a reflection of a complex equation of a dozen or so contractual variables that interact with overall deal dynamics, including company-specific and secular market conditions, to produce a deal-specific outcome in the relevant post-crash transactions.
In this issue of Kirkland Brief, partners Scott Moehrke, Lisa Cawley and Stephanie Biggs discuss how U.S. federal regulation of private investment fund managers is likely as part of an overall financial services regulatory reform package.
Laura Fraedrich discusses her practice.
This issue includes the article “IRS Guidance Extends Filing Deadline for Some (But Not All) FBAR Filers,” which reports that the IRS recently extended the FBAR filing deadline until June 30, 2010, for filings relating to (i) U.S. persons with signature or other authority over, but no financial interest in, foreign financial accounts and (ii) interests in foreign commingled funds.
The State of Maine recently enacted a new law that significantly restricts the collection and use of personal information from minors for marketing purposes. The new law, entitled “An Act to Prevent Predatory Marketing Practices against Minors” and scheduled to take effect on September 12, 2009, regulates how online and offline marketers acquire certain information from minors and how that information is used to direct advertising to minors.
Until now, the “bankruptcy remote” attributes of CMBS borrowers have remained largely untested. However, the bankruptcy court overseeing the chapter 11 cases of General Growth Properties, Inc. and certain affiliated entities last week issued a 47-page opinion squarely addressing the ability of nominally “bankruptcy remote” CMBS borrowers and other SPEs to obtain bankruptcy relief.
In the inaugural issue of Kirkland Governance Watch, partners Robert M. Hayward, P.C., Carol Anne Huff, Theodore A. Peto and Daniel E. Wolf, and associate Sarah B. Gabriel summarize significant corporate governance developments in order for senior management and boards of directors to remain informed and begin to consider key planning implications and initiatives.
In this issue, partner Dennis M. Myers, P.C., and associate Michael Chu discuss a recent District Court decision that calls into question whether a confidentiality agreement between a company and a shareholder that does not contain restrictions on the use of confidential information received by the shareholder can be the basis of an insider trading claim under the "misappropriation" theory.
This issue includes the article “SEC Proposes Rule Prohibiting ‘Pay to Play’ for Investment Advisers, Including Private Equity and Other Private Fund Principals,” which discusses the newly proposed rule from the SEC which prohibits “pay-to-play” practices for investment advisers and their “covered associates.”
Jay Lefkowitz and Jeff Rosen authored this article regarding federal preemption of health and safety regulators.
David Handler authored this piece about estate planning issues in the context of the discussion surrounding the estate of musician Michael Jackson.
Can the IRS compel a taxpayer to produce its own internal analyses — prepared by counsel— of questionable tax positions and the likelihood of success in litigation with the IRS? That issue was addressed during the highly anticipated en banc rehearing in United States v. Textron, which took place on June 2, 2009 before the United States Court of Appeals First Circuit.
Richard Cieri discusses his practice.
Grant Nakayama discusses his practice.
Jennifer Selendy discusses her practice.
Three recent developments in data security law underscore the evolving and complicated legal patchwork applicable to businesses that handle personal information about individuals.
The American Recovery and Reinvestment Act of 2009 (“ARRA”), passed in February 2009, created a cash grant program for qualified renewable energy facilities. Entities placing these facilities in service may receive cash grants of up to 30 percent of the tax basis of the property. ARRA vested authority over the program with the Department of the Treasury (“Treasury”). There is no statutory cap on program benefits. These grants are in lieu of investment tax credits, and use of a Treasury grant precludes a facility from being eligible for the production tax credit or the investment tax credit. On July 9, 2009, Treasury released application guidance and related documentation, including a sample application.
On June 26, 2009, the House of Representatives passed the American Clean Energy and Security Act, H.R. 2454. The stated goals of ACES are to create clean energy jobs, achieve energy independence, reduce global warming pollution, and transition to a clean energy economy.
Jon Henes, Kirk Radke and Christopher Greco authored this article regarding trends in Chapter 11.
This Kirkland Alert,authored by partners Carol Anne Huff and R. Henry Kleeman, discusses amendments to the NYSE's Rule 452 that, nearly three years after they were originally proposed, will provide that the election of directors is not a routine matter for which NYSE member firm brokers would be permitted to cast votes for uninstructed shares.
Luke Dauchot discusses his practice.
This issue, authored by partners Thomas W. Christopher and Grant H. Caldis, covers amendments to the General Corporation Law of the State of Delaware addressing issues relating to: shareholder access to proxy materials; reimbursement of proxy solicitation expenses; indemnification rights and advancement of expenses; fixing record dates for shareholder meetings; and removal of directors.
On June 10, 2009, the Department of Treasury released its most recent set of guidance on the standards for compensation and corporate governance that apply to companies participating in the government’s Troubled Asset Relief Program (“TARP”). This guidance generally replaces all guidance previously issued on the subject, and became effective on June 15, 2009.
This issue includes the article “Filing Deadline for Holders of Foreign Bank and Financial Accounts Looms,” which reports that U.S. persons who have a financial interest in, or signature or other authority over, foreign bank or financial accounts exceeding $10,000 in the aggregate at any time during a calendar year must file a form with the Department of the Treasury by June 30, 2009.
This issue includes the article “Treasury’s Regulatory Reform Proposals — Impact on Private Fund Managers,” which discusses a new proposal from the U.S. Department of the Treasury that calls for all managers of “private pools of capital” to register with the SEC as an investment adviser if they meet a relatively low assets-under-management threshold.
Kirkland attorneys co-authored this piece regarding trends in compensation.
On June 1, 2009, in a civil fraud trial, the former CEO of Kmart was found liable for misleading investors about Kmart’s finances before its 2002 bankruptcy filing by failing to disclose just such a slow-pay program.
In this M&A Update, partner Daniel Wolf discusses the SEC's May 20 vote to propose a comprehensive set of rules governing proxy access. Although the full text of the proposed rules has not yet been made public, with the change of administration and SEC leadership in Washington, D.C., it is likely that the SEC will enact rules that allow shareholders meeting certain minimum ownership and other criteria to nominate directors for election directly in the company’s proxy statement, rather than being required to use the traditional proxy-contest method of sending their own proxy statements.
On May 20, 2009, President Obama signed into law the Fraud Enforcement and Recovery Act of 2009. FERA makes several important changes to the criminal and regulatory landscape facing corporations and businesspersons.
In TransCore, LP v. Electronic Transaction Consultants Corp., No. 2008-1430 (Fed. Cir. Apr. 8, 2009), the Federal Circuit addressed the question of whether a covenant not to sue is equivalent to a non-exclusive patent license for purposes of patent exhaustion. Following closely in Quanta’s footsteps, the Federal Circuit held that “an unconditional covenant not to sue” does authorize sales “by the covenantee for purposes of patent exhaustion.”
On May 12, 2009, the newly confirmed Assistant Attorney General for Antitrust, Christine Varney, discussed Department antitrust enforcement plans during a speech to the U.S. Chamber of Commerce in Washington, D.C. In the speech, Ms. Varney repeatedly promised that the Department of Justice would be increasing its antitrust enforcement efforts, in both the civil and criminal arenas.
This issue includes the article “’Pay-to-Play’ Arrangements and Placement Agent Involvement with Public Pension Funds Subject to Nationwide Investigations,” which reports that recent investigations into and indictments for alleged “pay-to-play” activities have brought scrutiny upon the relationship between placement agents and state pension and other public plan investors. Also featured is “EPA Offers Enhanced Incentives to Encourage Self- Reporting by Purchasers,” which describes the new policy that offers an opportunity for buyers of businesses and regulated facilities to resolve environmental issues and mitigate their exposure.
In-house counsel increasingly have become the focus of investigations and enforcement actions by both the Department of Justice and the Securities and Exchange Commission. The proliferation of white-collar cases focused on Fortune 1000 companies, however, has brought greater scrutiny on in-house lawyers based upon their knowledge of or role in business decisions.
Dale Cendali discusses modern copyright law.
On Monday, May 4, 2009, the U.S. Supreme Court issued a decision that significantly alters the scope of private parties’ liability for environmental cleanup costs under the federal “Superfund” statute, or CERCLA.
The U.S. EPA recently announced an expansion of its Audit Policy aiming to encourage “new owners” of regulated facilities to voluntarily disclose and correct environmental violations in exchange for a mitigation of penalties. The new policy presents a significant new opportunity to buyers of businesses and of regulated facilities, as well as new challenges for business transactions where one party seeks to make use of the new policy.
On April 20, 2009, the United States Court of Appeals for the Federal Circuit issued its opinion in Princo Corporation, et al. v. International Trade Commission, et al., No. 2007-1386 — the latest decision commenting on the intersection between antitrust and intellectual property.
Paul Leaf authored this article about disability benefits for veterans.
The issue of whether keyword advertising may constitute trademark infringement has garnered substantial attention in recent years, particularly the question of whether the sale of trademark keywords by search engine companies such as Google is a trademark "use in commerce," one of the required elements of a trademark infringement claim.
Michael Jones authored this article on the use of humor to sway juries who may be hostile towards corporate defendants.
On April 6, 2009, Mary L. Schapiro, Chairman of the U.S. Securities and Exchange Commission, presented the SEC's upcoming regulatory agenda in a speech to the Council of Institutional Investors. Chairman Schapiro noted in her opening remarks that the SEC remains the only federal agency dedicated to looking out for investors, and that there has been "no time in history that investors have been more in need of an advocate than today."
It has been an open question whether Environmental Protection Agency may use cost-benefit analysis when determining the appropriate cooling water system for large power plants. A recent Supreme Court of the United States decision reverses a Second Circuit decision that had rejected EPA’s approach of using cost-benefit analysis.
Andrew Genser authored this article regarding recent developments in the Auction Rate Securities market.
Bruce Ettelson, Mark Mifsud and Karen Sodke co-authored this article on developments in private equity law.
This issue includes the article “TARP/AIG Bonus Bill Could Affect Private Equity Firms and Their Portfolio Companies,” which outlines how the new House bill prompted by the recently paid AIG bonuses could affect virtually any bonus payments made by a company related to a recipient of more than $5 billion in TARP funds. Also featured is “Private Equity Firm Files Lawsuit Against Two of Its Allegedly Defaulting LPs,” which states that lawsuits like CapGen are rare, as capital contribution defaults by LPs have been few and far between, even amid the current global financial crisis.
This Environmental Alert focuses on recent developments in the regulation of greenhouse gas emissions that may interest clients and friends of the Kirkland & Ellis LLP Environmental and Energy Groups. The alert focuses primarily on the U.S. Environmental Protection Agency’s recent issuance of a proposed rule requiring facilities and corporations to annually report GHG emissions.
This Environmental Alert focuses on recent developments in the regulation of impoundments, and specifically, coal ash waste, that may interest clients and friends of the Kirkland & Ellis LLP Environmental and Energy Groups. The alert focuses primarily on U.S. Environmental Protection Agency’s recent issuance of letters to facilities and corporations seeking information related to these impoundments.
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 that was passed by Congress on February 13, 2009. The Act is the latest piece of legislation aimed at providing financial assistance to distressed financial institutions under the Emergency Economic Stabilization Act of 2008, which established the Troubled Asset Relief Program.
This issue includes the article “Pending ‘EFCA’ Labor Legislation Would Bring Sweeping Change to American Labor Laws,” which discusses how enacting EFCA labor legislation would likely increase both unionization and the speed with which it can occur. Also featured is “New Illinois Anti-“Pay-to-Play” Ethics Laws Applicable to Private Equity Funds and Their Portfolio Companies,” which reports on the new Illinois ethics laws. Additionally, the article “Investment Firms Fined $800,000 for Failure to Make HSR Filings,” which discusses the recent enforcement of HSR Act reports and obligations.
Peter Doyle and Michael Reisman co-authored this article regarding arbitration law in the United States.
On February 26, 2009, the NYSE revised its proposal to amend Rule 452 to provide that the election of directors is not a routine matter for which NYSE member firm brokers would be permitted to cast votes for uninstructed shares.
The economic stimulus legislation that passed Congress last Friday and which President Obama signed on Tuesday contains important relief for companies seeking to restructure their debt in the current economic crisis.
Gerald Nowak authored this article regarding negotiations involved in high-yield indentures and the covenants typically found in the indenture.
This issue includes the article “Economic Stimulus Legislation Provides Deferral of Debt Cancellation Income and Temporary Relief from AHYDO Interest-Deduction Disallowance Rules,” which reports on the economic stimulus legislation, allowing taxpayers to defer most CODI over a 5-year period and temporarily suspending the application of AHYDO rules for new debt issued in exchange for existing debt.
On January 30, 2009, the U.S. Citizenship and Immigration Services announced that it has delayed, until April 3, 2009, the implementation of a rule that would require that all documents presented during the employment verification process be unexpired and also reduce the list of documents employers may accept when confirming work authorization status for employment applicants or existing employees, as required by law.
Jon Henes authored this article regarding the trend of stealth takeovers.
This issue includes the article “Financial Service Reform Begins — Proposed Registration of Private Funds and Their Advisers,” which reports that proposals in the Senate and House call for new registration requirements for private funds and their managers. Also featured is “New Hart-Scott-Rodino Act Thresholds & Penalties,” which states that annual revisions to the HSR thresholds become effective on February 12, 2009.
Scott Moehrke and Andrew Wright authored this article regarding trends in investment funds.
Upon the inevitable collapse of any Ponzi scheme, investors, financial institutions and others — even the innocent — will face challenging and complex legal issues. The steps our clients take soon after the collapse may have a lasting impact on their rights going forward. We discuss below several key issues relating to post- Ponzi scheme litigation.
Michael Jones authored this article about the importance of rhetoric for trial litigators.
The Emergency Economic Stabilization Act of 2008 (Act) established the Office of Special Inspector General for the Troubled Asset Relief Program to oversee compliance with its rules and regulations and investigate waste, fraud and abuse.
Arun Kurichety, Ross M. Kwasteniet and Anup Sathy co-authored this article regarding trends in Chapter 11.
On December 8, 2008, the final rule amending the cross-border exemptions for business combination transactions and rights offerings that was published by the Securities and Exchange Commission on September 19, 2008 took effect. See SEC Release No. 33-7759 (34-58597) (September 19, 2008). While the amended rules do not change the basic approach or scope of the U.S. regulatory regime, they should provide participants in cross-border business combination transactions involving non-U.S. targets with greater certainty and flexibility in structuring their transactions.
Jonathan Henes comments on the outlook for the restructuring market in 2009
The Federal Trade Commission recently announced revisions to the Hart-Scott-Rodino Act filing thresholds. The HSR Act requires annual adjustment of the jurisdictional thresholds based on the change in the U.S. gross national product.
This issue includes the article “Bankruptcy Buyers Beware: Free and Clear May Not be Free and Clear on Appeal,” which discusses a recent bankruptcy court decision which threatens the “free and clear” provisions of section 363 sale orders. Also featured is “Delaware Case Addresses Material Adverse Effect,” which reports that the Delaware Chancery Court has again ruled that proving an MAE is a very high hurdle under Delaware law. Additionally, the article “German Government Seeks “Public Interest or Security” Review Right for Acquisitions of Businesses by Non-European Investors” discusses how a proposed German law seeks to restrict acquisitions of 25 percent or more of German businesses by non- European investors.
Before February 3, 2009, trademark owners have the unique opportunity to apply for .tel domains that are the same as their registered marks. Starting on February 3, 2009, anyone can register a .tel domain. So it is important for trademark owners to act now.
On December 19, 2008, the Federal Reserve Bank of New York released a revised set of terms and conditions for the Term Asset- Backed Securities Liquidity Facility. The Fed’s goal for the TALF is to provide liquidity to the market for asset-backed securities backed by pools of consumer assets in order to facilitate new issuances, and in turn revive consumer lending.
Jay Lefkowitz comments on President George W. Bush's agenda to combat the global AIDS epidemic.
Jay Lefkowitz authored this article regarding the need for balance between security and human rights in North Korea.
On December 9, 2008, the Staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission publicly released its Financial Reporting Manual (“2008 Manual”), a reference guide for Division staff members that addresses many important aspects of the financial reporting and disclosure rules applicable to SEC reporting companies. The 2008 Manual is primarily intended for the use of the Division’s staff; however, the Staff ’s decision to post the manual on its Web site provides SEC reporting companies, as well as their auditors and other advisors, the opportunity to better understand the Staff ’s position on many important issues.
On September 29, 2008, the Delaware Chancery Court decided Hexion Specialty Chemicals, Inc. (Hexion), et al. v. Huntsman Corp. (Huntsman) and addressed several legal issues that are important to deal professionals among these (i) expanding on prior law regarding a party’s ability to demonstrate that a material adverse effect (MAE) has occurred, (ii) determining which party to a contract bears the burden of proving that an MAE has occurred and (iii) defining what constitutes a “knowing and intentional” breach of contract.
It is axiomatic that steep declines in securities prices draw out the securities plaintiffs bar, especially when securities sold to retail customers are at issue. Since January 2008, U.S. equity markets have fallen more than 30% with overseas markets following suit. That alone would be sufficient to fuel plaintiffs’ appetite to seek redress for their market losses. But in this economic downturn, plaintiffs attorneys have a new target to shoot at — structured derivative notes sold to retail customers.
John Irving authored this article regarding trends in labor law.
On November 13, 2008, in In re Deseret Power Electric Cooperative, the Environmental Protection Agency’s Environmental Appeals Board remanded a decision by EPA Region 8 issuing an air permit for a proposed waste-coal-fired electric generating unit for reconsideration of the Region’s determination that it was not authorized to impose “best available control technology” emissions limits for carbon dioxide.
On Wednesday, October 8, the Supreme Court heard oral argument in Summers v. Earth Island Institute. In this case, the Supreme Court considers the justiciability of challenges to certain Forest Service regulations authorizing logging in areas damaged by fire without various procedures Congress had generally specified for forest management. In this podcast, Kirkland partner Jeffrey Clark discusses the case.
On November 21, 2008, the Department of the Treasury published long-awaited final regulations to implement the Foreign Investment and National Security Act of 2007, which codified certain aspects of the structure, role, process, and responsibilities of the Committee on Foreign Investment in the United States.
Jonathan Henes authored this article regarding the lack of financing for distressed companies.
The current global economic crisis has thrust executive compensation, and the compensation committees of U.S. public company boards, back into the spotlight. Members of compensation committees should be aware that in today’s environment their actions are more likely to draw public scrutiny than ever before, and that a number of recent developments, which on their face may not be directly applicable to non-financial institutions, may nonetheless further tighten the rules governing executive compensation.
In the last few months the Delaware Chancery Court has rendered three separate opinions addressing the fiduciary duties of directors of target companies in change of control situations. Each of these decisions addressed the issue of whether the actions of a board of directors in connection with a sale of a company breached the directors’ duty of good faith so as to render the exculpation provision of the company’s charter inapplicable to such actions.
The Internal Revenue Service has announced the 2009 dollar limits for employee benefit plans.
Massachusetts and Nevada have recently enacted groundbreaking laws governing businesses that own, license, or possess certain personal information about individuals. These laws significantly expand a continuing legal trend of increasing regulation of - and potential liability relating to - the business use of individuals’ personal information.
This issue includes the article “The End is Near: Deferred Compensation Plan (IRC §409A) Compliance Required by December 31, 2008” which states that effective January 1, 2009, all deferred compensation arrangements not only must be operated in compliance with 409A, they must also comply in form with 409A’s provisions.
Effective January 1, 2009, all deferred compensation arrangements not only must be operated in compliance with 409A, they must also comply in form with 409A’s provisions.
This issue includes the article “Lehman Commercial Paper Inc. Files For Chapter 11,” which reports that the LCPI also filed a motion seeking emergency relief from the bankruptcy court, which was granted late yesterday.
Lehman Commercial Paper Inc., the subsidiary that provides administrative agency services to many of the lending syndicates agented by a Lehman entity filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York.
This issue includes the article “New Tax Law Restricts Hedge Fund Fee Deferral Arrangements,” which reports the $700 billion “bailout bill” signed into law on October 3, 2008, contains changes to the U.S. tax code that will effectively eliminate the ability of U.S. hedge fund managers to defer paying tax on fee income from their offshore hedge funds.
Jon Henes authored this article regarding the current financial market.
Laurence Urgenson and Peter A. Farrell co-authored this article regarding developments in the mortgage market.
This issue includes the article “SEC Issues Emergency Orders on Short Selling and Announces Expanded Market Manipulation Investigation,” which reports that, in response to recent market turmoil, the SEC has issued an emergency order prohibiting short selling in securities of designated public financial institutions, effective through October 2.
In light of last week’s market turmoil, the rapid collapse of several financial institutions' stocks, the continuing pressure on many other financial institutions' stocks and increasing criticism of SEC inaction, the SEC issued an emergency order initially prohibiting short selling in securities of 799 designated public financial institutions.
On July 28, 2008, the SEC staff issued an industry-favorable no-action letter stating that Rule 206(4)-3 under the Investment Advisers Act of 1940, as amended, commonly known as the “Cash Solicitation Rule,” does not apply when an SEC registered investment adviser pays a person to solicit prospective investors for a private fund.
This issue includes the articles “Insiders’ Loan to Cash-Strapped Company Cannot Be Equitably Subordinated Without Specific Evidence of Actual Harm to Creditors,” “Shanghai Moves to Ease Foreign Investment,” “China’s New Antitrust Law Puts New Burdens on Companies Doing Business in China” and “SEC Clarifies that Rule Regulating Cash Payments to Placement Agents Does Not Apply to Fundraising by Private Funds.”
Section 510(c) permits a bankruptcy court (subject to appeal, of course) to subordinate one claim to another claim or even to an equity interest if the offending party engaged in inequitable conduct that resulted in actual injury. A recent federal appeals court decision on the extent to which insider loans may be equitably subordinated has provided an opportunity to examine how those rules of the road work.
The FTC recently approved four new rule provisions that clarify certain requirements of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003. In addition, the Statement of Basis and Purpose accompanying the new rules clarifies the Commission’s position on so-called “forward-to-a-friend” emails and the requirement that the seller must provide some consideration or inducement for CAN-SPAM to apply.
Jon Henes authored this article regarding the effects of the economy on the credit market.
Amy Wollensack authored this article regarding the regulation of pharmaceutical research in developing countries.
James Mutchnik, Christopher Casamassima and Brenton Rogers authored this article regarding rising fines imposed upon corporate antitrust defendants by the U.S. Department of Justice Antitrust Division.
Reed Oslan authored this article on the emergence of AFAs as an accepted alternative to the way clients compensate their lawyers.
This issue includes the article “Treasury Proposes Regulations Implementing Foreign Investment and National Security Act,” which reports that proposed regulations clarify the national security reviews of investments in U.S. businesses by foreign persons. Also featured is “Bad News: House Bill Attacks Hedge Fund Fee Arrangements,” which discusses a provision eliminating the ability of U.S. hedge fund managers to defer paying tax on compensation from offshore hedge funds. Additionally, “Good News: California Withdraws Proposed Investment Adviser Registration Rules,” reports that investment advisers in California can continue to rely on existing exemptions for registration.
Scott Falk and Jody Gale authored this article about rules of compliance with Securities and Exchange Commission (SEC) reporting obligations.
In this issue, Kirkland partners Thomas Christopher and Jeffrey Symons will discuss how two recent Delaware Chancery Court decisions and certain practices of activist shareholders suggest it may be prudent for public companies to review and possibly amend the provisions of their bylaws providing for advance notice by shareholders of proposals to be considered and persons to be nominated for election as directors at annual meetings (collectively “advance notice bylaws”).
In Procter & Gamble Co. v. Ultreo, Inc., the United States District Court for the Southern District of New York considered whether the work product doctrine protected the disclosure of certain substantiation studies conducted at the request of the advertiser’s outside counsel.
On July 26, 2007, President Bush signed into law the Foreign Investment and National Security Act of 2007, which amended Section 721 of the Defense Production Act of 1950. Generally, FINSA codified certain aspects of the structure, role, process, and responsibilities of the Committee on Foreign Investment in the United States.
Jay Lefkowitz authored this article regarding developments in the government's North Korea policies.
In the first case to address the treatment and level of priority of the new pension termination premium in the bankruptcy context, the United States Bankruptcy Court for the Southern District of New York recently held that the pension termination premium is a prepetition unsecured claim subject to discharge in a chapter 11 case.
On February 21, 2008, the IRS issued Revenue Ruling 2008-13 addressing the application of the performance-based compensation rules under Section 162(m) of the Internal Revenue Code of 1986. This alert discusses the events that led to the issuance of the Ruling and the Ruling’s implications for public company executive compensation planning.
Jon Henes and Lauren Shumejda discuss the recent impact of a Chapter 11 court decision for Solutia regarding the purchase of secured debt.
This issue includes the article “To File or Not to File...Proper Records Retention and Destruction Policies,” which states that successful handling of records retention obligations reduces legal risks and creates opportunity for cost savings. Also featured is “City of Chicago Citing Firms Lacking a Business License,” which reports that business licenses are required for “doing business” in the City of Chicago.
A Kentucky Federal court recently held that a participant in a competitive auction which failed to comply with the standstill terms of a confidentiality agreement with the target could be held liable to a competing bidder, in tort, for the increase in the purchase price that took place after a “deal jump” on the basis that the deal jumper had failed to abide by the “rules of the game.”
Philip Crump discusses the circumstances in which commitment letters can constitute legally enforceable agreements.
Jay Lefkowitz authored this article about Ms. magazine's rejection of an advertisement submitted by the American Jewish Congress.
This issue includes the article “PBGC Holds Private Equity Fund Liable for Portfolio Company’s Pension Underfunding,” which reports that private equity funds are now exposed to a greater risk of inheriting the pension fund liabilities of their portfolio companies.
Jay Lefkowitz authored this article on the president's stem-cell research policy.
The Federal Trade Commission recently announced revisions to the Hart-Scott-Rodino filing thresholds. The HSR Act requires annual adjustment of the jurisdictional thresholds based on the change in the U.S. gross national product. This alert presents the new thresholds.