This session will provide a comprehensive understanding of the Business Judgment Rule (BJR) as it applies to corporate governance, with a specific focus on how directors and officers can navigate potential litigation. The session will start with a foundational overview of the BJR, followed by an in-depth analysis of the key legal cases that have shaped its application. Additionally, the session will delve into the strategies for advising corporate clients—particularly directors and officers—on how to avoid becoming targets of litigation, including the role of independent board directors in mitigating risk.
Session Structure and Key Topics:
1. Introduction to the Business Judgment Rule (BJR)
Objective: Provide a foundational understanding of the BJR and its role in corporate governance.
- Definition of the BJR and its purpose in protecting directors and officers from liability.
--- The BJR presumption: when courts defer to the decisions of corporate leaders.
--- Key elements required to invoke the BJR: good faith, rationality, and lack of conflicts of interest.
--- Key areas where the BJR applies: financial decisions, strategic direction, and operational oversight.
2. Key Legal Cases Shaping the Business Judgment Rule
Objective: Explore the landmark cases that have defined and evolved the application of the BJR.
- Smith v. Van Gorkom (1985): The duty of care in decision-making and its relation to the BJR.
- Aronson v. Lewis (1984): The standard for judging board decisions and establishing the BJR presumption.
- In re Caremark International Inc. Derivative Litigation (1996): The BJR's application in oversight and monitoring duties.
- Stone v. Ritter (2006): Examining the role of good faith and the implications for directors' oversight responsibilities.
- Directors' duty of loyalty vs. duty of care: Understanding the balance and how courts distinguish between them.
3. Litigating Business Judgment: Defending and Pursuing Claims
Objective: Offer insight into the litigation landscape for D&O claims and how the BJR impacts defense and pursuit of litigation.
- Litigating under the BJR: When the rule can be overcome by plaintiffs and how courts assess the decision-making process of directors.
- Strategies for defending directors and officers in lawsuits, including the use of the BJR as a key defense.
- How plaintiffs attempt to overcome the BJR (e.g., allegations of bad faith, lack of independence, or conflicts of interest).
- Case studies and trends in shareholder derivative suits and class actions.
4. How to Advise Directors and Officers to Avoid Becoming Targets of Litigation
Objective: Discuss proactive strategies for corporate advisors to help directors and officers avoid litigation exposure.
- Best practices for documenting decisions to ensure alignment with the BJR.
- The importance of maintaining a robust conflict-of-interest policy and board independence.
- Key governance practices that mitigate risks: regular board evaluations, clear delegation of authority, and transparency in decision-making.
- Ensuring compliance with statutory and fiduciary duties—particularly in distressed situations.
- The role of internal and external advisors in helping directors navigate complex situations.
5. The Role of Independent Board Directors in Mitigating Risk
Objective: Highlight the importance of independent directors in protecting the organization and its leadership from litigation.
- Defining the role and responsibilities of independent board members.
- How independent directors help reinforce the BJR in decision-making processes.
- The critical role of independent directors in distressed or bankruptcy situations.
- Best practices for selecting, empowering, and working with independent board directors to safeguard against personal liability.
Target Audience:
General Business Bankruptcy Counsel | Corporate Governance Professionals | Directors and Officers (D&O) | Litigators specializing in corporate governance and D&O cases | Financial Advisors specializing in distressed situations and workouts | CROs
Learning Objectives:
- Gain a comprehensive understanding of the Business Judgment Rule and its importance in corporate governance.
- Analyze major legal cases and their impact on the application of the BJR.
- Develop strategies for defending and pursuing litigation involving directors and officers.
- Learn proactive strategies for advising directors and officers to minimize the risk of personal liability and litigation.
- Understand the importance of independent board directors in mitigating risks for directors and officers.
Business
Suggested Speakers
In high profile restructurings, managing public perception and crafting a go-forward narrative matters. This session explores how strategic communications play a critical role in mitigating reputational damage and preserving brand and estate value throughout the restructuring process, including positioning the company for success upon emergence.
We will explore the importance of:
- Developing a comprehensive communication strategy to address various stakeholders (employees, partners, media, etc.) and preserve enterprise value
- Being prepared to implement aspects of the strategy even before filing (given propensity for leaks) and during key moments of the process through emergence
- Communicating effectively to promote business objectives, shape public perception, support legal strategies, and stabilize key stakeholder relationships
- Proactively (and reactively) addressing misinformation, media inquiries and stakeholder concerns to protect the brand and franchise
- Learning from real-world examples of communication efforts in major bankruptcies
Participants will be able to understand:
- The role strategic communications play in preserving value of the brand and business, including keeping internal and external parties apprised and on side
- The importance of crafting clear, forthright, consistent and timely messaging
- The ways in which strategic communications can significantly influence the outcome of a restructuring process
Because bankruptcy attorneys are being asked to find non-bankruptcy solutions more and more, to avoid the expense of full-blown bankruptcy, I would love to develop competencies in areas just adjacent to our normal practice area.
Article 9 sales are one area that are so close. I would love to know more.
From understanding the goals of private equity/private finance to understanding the nuts and bolts of service requirements, potential litigation tactics that may come in to play after the fact with creditors, to traps for the unwary, I think there is a lot to cover here.
Business
Jennifer
McLemore
jmclemore@williamsmullen.com
Williams Mullen
The session will review the big deals in distressed investing in 2024 and make some predictions about 2025.
I would envision 3 speakers addressing small, medium and large sized transactions. The panelists would include claims trader, real estate investor, and hard asset (private equity) investor. The moderator could be an attorney that services these constituencies.
The distressed investing world provides a significant amount of work for the legal community. I was instrumental in putting together a program for TMA NY that focused on the Private Credit Market which sold out.
Debtor
Joseph
Sarachek
joe@saracheklawfirm.com
Sarachek Law Firm
Lenders face a fundamental problem in life: the math, from the onset, favors the borrower. This is nowhere better displayed than in real estate transactions, where most debt is non-recourse and secured at the property level. Much legal work in a real estate transaction can be viewed as an effort to make up for and possibly invert the inherent disadvantages of the lender. This session aims to provide an intuitive, practical understanding of the role of option theory in structuring and valuing the positions of borrowers and lenders.
Be able to look at any situation and better assess the value of embedded optionality. See value or costs where you didn't see them before. Capture more value for your clients. Be able to draw option diagrams on cocktail napkins at networking events.
Debtor
Suggested Speakers
Israel
Shaked
ishaked@michel-shaked.com
Ken
Miller
kmiller@advisorsguardian.com
Guardian Advisors
Debtor estates and other distressed stakeholders can monetize formerly contaminated parcels which have no higher or better use than solar by leasing or selling those assets to specialized brownfields-to-solar developers. These niche developers can buy suitable parcels outright or offer twenty-year leases which can be transferred with the property. The Inflation Reduction Act and renewable energy-friendly states provide significant financial incentives which allow for generous lease rates. Bankruptcy trustees, debtor estates, creditors and other stakeholders have begun exploring this monetization strategy, which can be accomplished out of court, as long as the assets are at least partially remediated.
What is the brownfields solar financial model, whether through lease or acquisition, and how much revenue would it generate in a sample project?
What types of real estate assets are suitable for solar siting (and no other, higher/better uses)?
What geographical locations/states provide the best financial incentives (tax incentives, rec programs, high power rates) to generate the highest lease rate or purchase price for a trustee, debtor estate or other stakeholder?
What are the relevant provisions of the Inflation Reduction Act?
What are some of the relevant provisions in states with favorable policies?
How can a trustee, debtor estate or other stakeholder mitigate the environmental risk associated with brownfields solar projects?
How can public sector creditors properly dispose of or monetize through lease brownfield properties where the property owner is missing or refuses to appear in court proceedings?
Can environmental liabilities be discharged under section 363 of the Bankruptcy Code? Is that necessary in the context of developing solar on brownfields?
Debtor
Suggested Speakers
