Fiduciary duties in burnout/cramdown financings

Article Abstract:

Courts may soon have to address to what extent a fiduciary duty is owed to minority stockholders in the cramdown/burnout context, particularly when the corporation involved is closely held. Corporate finance tactics engaged in by a controlling entity or individual can have the effect of diluting the interests of minority stockholders who are powerless to object. When courts do rule on the issue, decisions are expected to be fact-specific, weighing business needs and the degree of dilution. Litigation risks can be minimized by addressing the potential for dilution in early negotiations with the founder.

Corporate governance, Close corporations, Closely held corporations, Minority stockholders

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Securitization vehicles, fiduciary duties, and bondholders' rights

Article Abstract:

Asset securitization is a form of corporate financing that often features a contractual attempt to shift board members' fiduciary duties from the corporation's shareholders to its debt holders. This shifting of fiduciary duty has led to doubts about the legality of securitization. However, an analysis of the legal and economic principles behind these transactions showed they are no more questionable than others so long as they remain within their legal foundations.

Secured transactions, Bondholders

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Private equity funds: What counts and what doesn't?

Article Abstract:

Anomalies in the course of private equity fund transactions are discussed, with emphasis on pooled investment vehicles and equity financing. Topics include fees management, hurdle rates and recapture, and allocation of losses and distributions.

Investment pools, Stock funds

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