Our attorneys understand the issues faced by the executive team of a financially troubled business. We are skilled at helping management balance the competing interests of stockholders, creditors, employees, and the community.
The “Business Judgment Rule” may offer some protection to directors who are asked to weigh alternative strategies for dealing with financial decline. We understand the rule, have written about it, and regularly work with directors to make sure that its shield is preserved as a viable defense, should creditors or stockholders attack.
Our attorneys have represented management when they have made loans to, or provided credit support for, financially troubled companies. We have also worked on management’s behalf when they have chosen to make capital infusions into an insolvent company, and we have done this in the context of public exchange offers used to avoid bankruptcy.
We have been called on in advance of a possible bankruptcy to establish management reward programs, such as retention plans or enhanced severance pay, to ensure those benefits will not be lost when bankruptcy ensues. We have also negotiated executive employment contracts with financially troubled, but not bankrupt, companies with an eye toward the enforceability of those contracts when the company later files for protection from its creditors.
During bankruptcy cases, we have asserted the rights of management by filing proofs of claim and dealing with objections that might be raised to those claims by trustees or creditors.
We also work well with companies’ bankruptcy and in-house counsel to make sure that management looks after its own interests, while addressing the needs of the company and the various constituencies in the bankruptcy case.
Our attorneys can negotiate and have approved the contractual arrangements that management wants and expects during and after a reorganization proceeding, including executive employment arrangements and stock option programs.
When litigation cannot be avoided, we forcefully defend management in any litigation brought against it.