Restructuring & Insolvency
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Cross-Border Conversion of a Company in the European Union

Traditionally, a cross-border “migration” of a company from one European Union (EU) Member State to another EU Member State, while technically possible, has been cumbersome and costly.  Such a migration would involve either a wholesale move of the subject company’s business seat (i.e., the location of its chief executive office) or a cross-border merger of national companies could be considered.  But that has now changed.  Recently, however, the VALE judgment of the European Court of Justice issued on July 12, 2012 has opened the door for EU companies to take advantage of a cross-border “conversion” (i.e. , the transfer of the registered office from one jurisdiction to another, including a change of applicable law, without the requirement of winding up, liquidating the company ).  Even though the VALE judgment was handed down in 2012, the precise procedural rules, in particular how local commercial registers would apply the rulings of the VALE judgment,...

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Cœur Défense: the Chronicle of a Foretold Reform of the French Safeguard Proceedings

The end of a legal saga On April 7, 2014, the Commercial Court of Paris put an end to the Coeur Défense’s legal saga by acknowledging the implementation of the two safeguard plans adopted for Heart La Défense (HoLD), a French corporation, and Dame Luxembourg S.à r.l. (Dame), HoLD’s sole shareholder.  As a reminder, HoLD subscribed to a 1.64B-Euro loan in July 2007 in order to purchase “Coeur Défense”, the largest office building in Europe.  In 2008, further to Lehman Brothers’s bankruptcy, safeguard proceedings were initiated to the benefit of HoLD and Dame.  Under the safeguard plans, HoLD had to repay the principal of the loan on July 10, 2014 to Windermere XII, a French securitization mutual fund.  From the beginning of these proceedings, Coeur Défense has attracted the attention of French courts, authors and specialists due to its potential impact on French bankruptcy proceedings. The reform of the French safeguard proceedings: the rebalancing of powers...

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Equity Investors: Be ForeWARNed

The Worker Adjustment Retraining and Notification Act (WARN Act) requires certain employers to give employees 60 days’ notice of plant closings and mass layoffs.  The goal of the WARN Act is to “provide workers and their families transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market.”  Employers who violate the WARN Act are liable to affected employees for up to 60 days of compensation and benefits. On December 10, 2013, the Second Circuit in Guippone v. BH S&B Holdings LLC addressed whether a holding company (HoldCo) and certain investors (Investors) should be deemed “employers” under the WARN Act, and thus liable for violations thereof.  The Investors created various entities to purchase and manage Steve & Barry’s Industries, Inc., which it acquired out of bankruptcy.  HoldCo...

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Caveat Emptor: Successor Liability for FLSA Claims

One of the primary advantages to acquiring businesses through asset sales as opposed to stock sales is the buyer’s ability to avoid successor liability.  There are exceptions to this rule in most states, including:  (i) impliedly or expressly assuming the liability in the asset purchase agreement; (ii) fraudulent sales of assets for the purpose of escaping liability; (iii) sales that are de facto mergers; and (iv) where the purchase is a mere continuation of the seller.  As a general matter, these exceptions are difficult to prove for parties seeking to establish successor liability. In Teed v. Thomas & Betts Power Solutions, LLC, the U.S. Court of Appeals for the Seventh Circuit recently addressed the limits of successor liability and ruled that an asset purchaser was liable for the seller’s pre-sale violations of the Fair Labor Standard Act (FLSA).  The company, faced with a lawsuit for FLSA violations, defaulted on their bank loan.  The company’s...

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Welcome to McDermott’s Corporate Deal Source Blog

Where have all the transactions gone?  The first quarter has quietly passed by.  Just a few weeks ago, looking through the pipeline, one could see almost unimpeded to the other side, relatively empty as the bankers say.  But hope exists, as suddenly activity seems to be reemerging.  We call it letter of intent flow (more poetically, LOI Flow).  The beginnings of real transactions.  Concurrently with these beginnings, we launch our inaugural Corporate Deal Source Blog.  And perhaps timing is on our side and we are well positioned to ride the next wave of deal activity from its very beginning. We set out here to provide commentary, not intended for other lawyers, but for our clients and those we hope will find benefit from becoming our clients.  Our goal is to dialogue as much as one can in the blogosphere and that our followers will help drive our content through comment and suggestion.  The Corporate Deal Source Blog aims to be a professional, yet...

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