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Corporate & Securities Law

Business Law Prof Blog

Business law resources, information, and news for the academic community

Post Frequency: 11.8/day

Last Entry: April 01, 2011 at 11:04:42

Big Three Auto Companies' Pleas for a Bailout: A Hook??

Posted on December 04, 2008
The CEOs of our big three domestic automobile companies are back in Congress today, asking for emergency loan funds to stave off bankruptcy. They drove, rather than flew in private jets, in energy efficient cars the 520 miles to Washington....

More Lawsuits

Posted on December 03, 2008
Icahn's investment partnership, an investor in the buyout of Realogy Corp. is suing to prevent the company from refinancing $1.1 billion in debt (a workout). The $1.15 billion in old debt, below, Ichan's will be transformed into $500 million new...

Novel Lawsuits Fly

Posted on December 02, 2008
A hedge fund, run by William Frey, has sued Countrywide and its parent, Bank of America, on their agreement with 41 state attorney generals to modify 400,000 mortgages originated and serviced by Countrywide. In the lawsuit the hedge funds states...

Sign of the Times: Insolvency Clauses Come the Fore in Stock PUrchase Agreements

Posted on November 28, 2008
For some time a buyer attempting to bust a signed leveraged buyout agreement would rely on the Material Adverse Change Clause, now buyers are relying on insolvency clauses. In the Bell Canada buyout the buyers are claiming that a buyout...

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Cerberus Reads Its Covenants

Posted on November 27, 2008
Cerberus has just read the covenants in its stock purchase agreement with Daimler Benz for 80 percent of the stock of Chrysler and has decided that Daimler "intentionally and materially" violated the value of its lease and loan portfolio. This...

Tax Losses and the Banking Crisis

Posted on November 27, 2008
Treasury, by two rule changes, has changed the tax loss carry forward rules for banks. On September 30th, Treasury decided that a buyer of a troubled bank could use all the tax losses of the selling bank to offset the...

Tuesday's $800 Billion Credit Market Bailout: An Incentive to Sercuritize??

Posted on November 26, 2008
Monday was the Citigroup bailout and Tuesday was the $800 Billion credit market bailout. The goal of the new bailout is to free up credit in consumer credit markets -- mortgages, car loans, student loans, and credit card loans. The...

Geithner, The New Treasury Secretary: There is Nothing "New" About Him

Posted on November 25, 2008
The markets soared on Friday on the announcement of Tim Geithner as the "new" Secretary of the Treasury. But just how "new" is he? He was Paulson's "go to guy" as President of the largest Federal Reserve Bank in New...

The Citigroup Bailout: More Confusion

Posted on November 25, 2008
The markets hailed the fact of the Citigroup bailout, but we are just now digesting the details. Last month Treasury bought $25 billion in preferred stock and warrants (at-the-market and equal to 10% of the value of the preferred). Yesterday,...

Bailout Questions

Posted on November 24, 2008
Sometimes the simple questions are the most revealing. 1) Should a government bailout forces banks to take or apply for money they do not need?? 2) If the government can "spend" its way out of distress and it will eventually...

Delaware Courts and Distress Deals: A Word to the Wise

Posted on November 21, 2008
Delaware courts are now adjudicating "busted deals," deals from the top of the bubble that were overpriced but not closed until the bubble burst. Buyers looking to escape are, largely, being forced to pay damages (or even close) for attempting...

The Ionia Management Case: ON Its Way to the Supreme Court??

Posted on November 21, 2008
A federal appeals courts is hearing arguments in the prosecution of a Greek shipping company, Ionia Management SA, for dumping waste in the ocean. The facts are not good but the case has, by luck, presented the federal courts with...

Defined Benefit Plans and the Economic Crisis

Posted on November 20, 2008
The front page of the New York Times reports on a request by pension funds for Congress to modify pension funding rules for defined benefit plans. Defined benefit plans are promises by employers to pay employees on retirement a percentage...

Paulson and Congress: High Comedy

Posted on November 19, 2008
Paulson's testimony before Congress was high comedy. Paulson was attempting to tell members of the House Financial Services Committee what they had passed in a rush in the Bailout bill now known as TARP. And Congress members were attempting to...

Cuban's Insider Trading Defense

Posted on November 19, 2008
I do not spend every waking moment on the definition of insider trading so perhaps I am missing something here. Cuban receives confidential information on corporate business problems from the CEO and the CEO ask him to keep it confidential....

Fannie Mae and Freddie Mac

Posted on November 19, 2008
On September 6th, federal regulators seized Fannie Mae and Freddie Mac. The Treasury promised $100 billion for preferred stock. Private investors still required hefty interest rates when asked to loan Fannie and Freddie even short term cash. So Freddie is...

Henry Paulson in the New York Times

Posted on November 18, 2008
Hank Paulson wrote his final official defense today in the editorial pages of the New York Times. It takes up one-third of the page and says -- well -- nothing that is not trite or trivial. His point - Treasury,...

When Do Managers Get Real?

Posted on November 18, 2008
A good litigator knows that things to clients look very, very different when they are in trial. During a dispute but before trial clients (and their lawyers) can spin and rationalize, moralize and condemn, but once they get in front...

Gov. Strickland and the DHL Fiasco

Posted on November 17, 2008
The last card had dropped in the DHL saga in Wilmington Ohio and Gov. Strickland is finally facing up to reality -- too late and after thoroughly sullying the state's reputation in its effort to attract new businesses. Here is...

The National City Scandal

Posted on November 17, 2008
In the spring, government regulators reached a "memorandum of understanding" with the management of National City Bank, a top ten national bank based in Cleveland since 1845. The shareholders were not told. the stock was trading in the thirties. In...

Obama's Election Strategy in Business Terms

Posted on November 14, 2008
President Elect Obama had a very straight forward election strategy that can be understood in business terms. Obama took two short positions and funded both with lots of cash ($650 million or $1 billion depending on how you count). He...

Suggestion for a New "String" on the Next TARP Authorization: Paulson Goes

Posted on November 14, 2008
Paulson has almost spent his first tranche of cash under the TARP bailout bill. He must go to Congress to get more cash. Congress is making noises about new "strings" for an approval of the next tranche of funds --...

Bush on Capitalism, Too Little Too Late

Posted on November 14, 2008
President Bush came out defending capitalism yesterday before the G-20. After his remarks the stock market zoomed up 800 points from historic lows. I do not know if his remarks caused the increase but the coincidence is interesting. Where was...

Damage Control for Treasury

Posted on November 14, 2008
The Treasury has been stung by revelations that a "review panels" mandated in the TARP program have not only not been working they have not been filled. Treasury has released a "Setting the Record Straight" press release that lists what...

Investment Banks Use Bailout Money for Executive Pay??

Posted on November 12, 2008
Goldman Sachs will pay $12.4 billion in executive bonuses after receiving $12.5 billion in bailout funds from TARP. Morgan Stanley and Merrill Lynch will pay another $8 billion in bonuses and Citigroup will pay $26 billion. Each bank received $12.5...

Paulson Should Be Fired

Posted on November 12, 2008
Paulson gives a news conference outlining "changes" in the TARP program and the market drops 350 points on the DJIA. The TARP program, he stated, originally sold by him as a vehicle to purchase Mortgages and Mortgage Backed Securities, will...

Should you stop paying your mortgage???

Posted on November 12, 2008
The question I get from my middle-class friends (read outside the law school) is "Should I stop paying my mortgage to get a piece of the government relief program?" They have a point. The new program for Fannie Mae and...

Auto Bailouts: How?

Posted on November 12, 2008
Amid continuing cries for a bailout of automobile companies by democratic politicians is a dearth of details. The basic question is how does one give money to companies that do not show an operating profit -- that is, its cost...

Junk Financial Recommendations: No Details

Posted on November 12, 2008
At some point good financial newspapers should realize that junk financial recommendations help no-one. In today's Wall Street Journal we have James B. Stewart's, "How Obama Can Fix the Economy." Junk. His general suggestions "Shore up banking...[aid] faltering industrial concerns"...

Fed is Slow on Commerical Paper Purchases

Posted on November 11, 2008
The Fed's program for financing the purchases of commercial paper is not yet off the ground and has been delayed. Other bailout programs have strained staff resources. Two smaller Fed programs have purchased some commercial paper but the main program,...

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