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Facing a lawsuit alleging that shares were improperly awarded because of the failure to count abstentions in determining whether an equity plan received shareholder approval, Cheniere Energy announced that it is delaying its annual meeting, originally scheduled for June 12, until September. A copy of the complaint is attached as an exhibit to the company’s release.
4 years 8 months ago
On June 2, 2014, EPA issued a proposed rule to control greenhouse gas emissions (GHGs) from the electric power generation sector of the United States. EPA’s goal is to obtain a reduction of GHG emissions in 2030 from this sector of 30% from the baseline year 2005. The 2005 baseline allows EPA to take credit for GHG emission reductions that have occurred since that time without any regulatory obligation. The proposal establishes GHG emission targets for each State (expect the District of Columbia and Vermont who do not have goals under the rule). Interim emission targets must be obtained in the 2020-2029 timeframe with final targets obtained by 2030. For an analysis of the proposed rule from the perspective of Bracewell’s Energy and Environmental Strategies lawyers, click here. The proposal does not suggest any particular emission limit on particular plants, but imposes the obligation on the States to derive a plan to achieve the reductions. The only penalty for noncompliance in the proposal is that EPA would impose an EPA-developed plan within the State if it fails to submit an approvable plan. While EPA has not dictated any particular approach a State may employ, the proposal favors a cap and trade or carbon tax system as the primary manner to obtain GHG emissions reductions.

Read More from: Basis Points

4 years 8 months ago
On June 2, 2014, EPA issued a proposed rule to control greenhouse gas emissions (GHGs) from the electric power generation sector of the United States. EPA’s goal is to obtain a reduction of GHG emissions in 2030 from this sector of 30% from the baseline year 2005. The 2005 baseline allows EPA to take credit for GHG emission reductions that have occurred since that time without any regulatory obligation. The proposal establishes GHG emission targets for each State (expect the District of Columbia and Vermont who do not have goals under the rule). Interim emission targets must be obtained in the 2020-2029 timeframe with final targets obtained by 2030. For an analysis of the proposed rule from the perspective of Bracewell’s Energy and Environmental Strategies lawyers, click here. The proposal does not suggest any particular emission limit on particular plants, but imposes the obligation on the States to derive a plan to achieve the reductions. The only penalty for noncompliance in the proposal is that EPA would impose an EPA-developed plan within the State if it fails to submit an approvable plan. While EPA has not dictated any particular approach a State may employ, the proposal favors a cap and trade or carbon tax system as the primary manner to obtain GHG emissions reductions.

Read More from: Basis Points

4 years 8 months ago
Greenpeace International, WWF International and the Center for International Environmental Law sent letters to executives and directors of 32 major oil, gas and energy companies, warning them that they may ultimately face personal liability related to climate change issues.  
4 years 8 months ago
Posted by Kathy Bazoian Phelps      In a very short and summary opinion, the Second Circuit concluded that nothing in a recent Supreme Court decision gave it any reason to revisit its prior ruling that SLUSA bars state law class action claims against banks in connection with the Bernard Madoff scheme. In re Herald, Primeo, and Thema, 2014 U.S. App. LEXIS 9871 (2d Cir. May 28, 2014).     As discussed previously in this blog, the Supreme Court in Chadbourne & Park LLP v. Troice, 134 S. Ct. 1058 (2014), declined to bar certain class action claims in the Stanford Financial Ponzi scheme case on the grounds that: (1) the certificates of deposits sold were not “covered securities”; and (2) the fraud was not “in connection with the purchase or sale of a covered security.”     The Second Circuit found no application of Troice in the Madoff case. Simply put, the court said, “Because the fraud perpetrated by Madoff Securities was ‘material to a decision by one or more individuals (other than the fraudster) to buy or to sell a 'covered security,' Troice, 134 S. Ct.

Read More from: The Ponzi Blog

4 years 8 months ago
The WSJ is reporting that the SEC staff may issue guidance as early as this week to cause proxy advisory firms to disclose more information about potential conflicts of interests. According to the article, the guidance will indicate that it is not sufficient for the firms to require investors to simply contact them about potential conflicts.  
4 years 8 months ago
Posted by Kathy Bazoian Phelps     Below is a summary of the activity reported for May 2014. The reported stories reflect: 9 guilty pleas or convictions in pending cases; over 95 years of newly imposed sentences for Ponzi schemers; at least 9 newly discovered schemes allegedly involving over $96 million; and an average age of 51 for the alleged Ponzi schemers in the stories reported. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.     Stanley W. Anderson, 70, was sentenced to 51 months in prison in connection with his solicitation and collection of $5 million from investors through his two companies, CFO-5 LLC and Trinity International Enterprises Inc., in what was a Ponzi scheme with no legitimate business operations. Charles Lawrence Kennedy Jr. and Edwin Alexander Smith were previously sentenced to 12 months and 30 months, respectively, in connection with the scheme.      Douglas Bates, 55, was sentenced to 5 years in prison for his role in assisting Scott Rothstein in defrauding certain clients of Rothstein’s law firm, Rothstein Rosenfeldt Adler.

Read More from: The Ponzi Blog

4 years 8 months ago
Six governance groups, including the National Association of Corporate Directors, Tapestry Networks and the Center for Audit Quality, have issued a “call to action” urging companies to enhance the audit committee reports in proxy statements. Many of the topics recommended are similar to our prior discussion of an E&Y survey that found large-cap companies already providing additional information beyond regulatory requirements, and indeed the report gives several helpful examples from those companies.  
4 years 8 months ago
What’s the difference between an individual Chapter 11 and a Chapter 13? In light of the Sixth Circuit’s recent Ice House America, LLC v. Cardin (.pdf of the option is here), there are now two major differences: Difference #1:             Chapter 11 has an absolute priority rule (and Chapter 13 doesn’t) Difference #2:             Individuals will still file Chapter 13 (and they won’t be filing Chapter 11 if they can help it)

Read More from: Creditors' Sidebar

4 years 8 months ago
A report issued by the Consumer Financial Protection Bureau (CFPB) found that a debt buyer dismissed 70% of its lawsuits when the consumer filed a written answer to the lawsuit. 
As part of a debt collector examination, Supervision reviewed collection lawsuits initiated by the entity. Examiners found that in 70% of the cases, when the consumer filed an answer, the entity would dismiss the suit because it was unable to locate documentation to support its claims.
Junk debt buyers purchase nothing more than a list of names and amounts owed, but they do not receive any real proof of the debt.  They receive no copy of the credit card contract, no record of the payments and charges to the account, no copy of the multiple amendments to the contract, no evidence of whether the contract is written or oral, and no explanation of of how the finance charges were calculated. 
Despite the entity’s express or implied representations to consumers that it intended to establish that consumers owed a debt in the amount claimed in court filings, in numerous instances, the entity misled consumers because it demonstrably had no such intention.
Do we have consumer fraud issue here?  Debt buyers are intentionally misleading consumers by filing lawsuits they have no intention of litigating since they lack meaningful proof of the debt.
4 years 8 months ago
A report issued by the Consumer Financial Protection Bureau (CFPB) found that a debt buyer dismissed 70% of its lawsuits when the consumer filed a written answer to the lawsuit. 
As part of a debt collector examination, Supervision reviewed collection lawsuits initiated by the entity. Examiners found that in 70% of the cases, when the consumer filed an answer, the entity would dismiss the suit because it was unable to locate documentation to support its claims.
Junk debt buyers purchase nothing more than a list of names and amounts owed, but they do not receive any real proof of the debt.  They receive no copy of the credit card contract, no record of the payments and charges to the account, no copy of the multiple amendments to the contract, no evidence of whether the contract is written or oral, and no explanation of of how the finance charges were calculated. 
Despite the entity’s express or implied representations to consumers that it intended to establish that consumers owed a debt in the amount claimed in court filings, in numerous instances, the entity misled consumers because it demonstrably had no such intention.
Do we have consumer fraud issue here?  Debt buyers are intentionally misleading consumers by filing lawsuits they have no intention of litigating since they lack meaningful proof of the debt.
4 years 8 months ago
The U.S. Supreme Court (“Court”) issued a 5-4 decision today in a case with implications for Tribal-State relations and the resolution of disputes under the federal Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq. (“IGRA”).  The Court in Michigan v. Bay Mills Indian Community[1] found that the sovereign immunity of the Bay Mills Indian Community (“Tribe”) barred a suit filed by the State of Michigan (“Michigan”) to enjoin Class III gaming on the Tribe’s Vanderbilt property, land the Tribe purchased in fee located 100 miles south of its reservation.  In making its decision today, a majority of the Court:
  1. affirmed the Court’s precedent that Indian tribes possess sovereign immunity from suit for commercial activities conducted outside of Indian lands;[2]
  2. affirmed the Court’s precedent that such tribal sovereign immunity can be abrogated only by clear and unequivocal Congressional authorization (or waiver);[3] and
  3. held that IGRA’s provision permitting a state to sue a tribe for Tribal-State Compact violations on “Indian lands”[4] did not waive tribal immunity to state suits for gaming conducted off  Indian lands.[5]
The Court, however, suggested that Michigan could resort to “other mechanisms” – including legal actions against the responsible tribal individuals – to resolve its dispute with the Tribe. DISCUSSION
4 years 8 months ago
The U.S. Supreme Court (“Court”) issued a 5-4 decision today in a case with implications for Tribal-State relations and the resolution of disputes under the federal Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq. (“IGRA”).  The Court in Michigan v. Bay Mills Indian Community[1] found that the sovereign immunity of the Bay Mills Indian Community (“Tribe”) barred a suit filed by the State of Michigan (“Michigan”) to enjoin Class III gaming on the Tribe’s Vanderbilt property, land the Tribe purchased in fee located 100 miles south of its reservation.  In making its decision today, a majority of the Court:
  1. affirmed the Court’s precedent that Indian tribes possess sovereign immunity from suit for commercial activities conducted outside of Indian lands;[2]
  2. affirmed the Court’s precedent that such tribal sovereign immunity can be abrogated only by clear and unequivocal Congressional authorization (or waiver);[3] and
  3. held that IGRA’s provision permitting a state to sue a tribe for Tribal-State Compact violations on “Indian lands”[4] did not waive tribal immunity to state suits for gaming conducted off  Indian lands.[5]
The Court, however, suggested that Michigan could resort to “other mechanisms” – including legal actions against the responsible tribal individuals – to resolve its dispute with the Tribe. DISCUSSION
4 years 8 months ago
A nightmare scenario for a lender: you lend $1.2 million to a debtor to purchase equipment; you take a first priority security interest in the equipment; one day another company calls to tell you it purchased the equipment at a bankruptcy auction you never knew about, for 10-20% of what you’re owed; you try to overturn the sale, but cannot, because the sale is consummated and your appeal is now “statutorily moot.”  Could this happen?  It happened in a recent Oregon case. In In re Pacific Cargo Services, LLC, 2014 WL 2041821 (D. Ore. May 9, 2014), the debtor conducted a public auction for its assets under Bankruptcy Code § 363.  Among the assets it sold were 11 specialized industrial trucks, which were General Electric’s collateral, and against which General Electric had loaned $1.2  million.  They were purchased at the auction for $180,000.  General Electric claimed that it first learned about the auction more than a week later, when the purchaser called to obtain titles thereto. 

Read More from: Creditors' Rights

4 years 8 months ago
 Morris James LLP is pleased to announce that thirteen attorneys in five separate practice areas have been top ranked among the leading Delaware lawyers in the 2014 edition of Chambers USA: America’s Leading Lawyers for BusinessChambers also ranked four of its practice areas as among the top practices in Delaware including Bankruptcy/Restructuring, Chancery, Intellectual Property and Labor & Employment.   Read more.  
4 years 8 months ago
State Street Global Advisors’ (SSgA) 2014 voting policy on director tenure focuses on what it identifies as the need for “board refreshment.” The policy outlines situations that could trigger the investor to vote against directors at its investee companies due to lengthy tenures. Unlike other major investors and even the proxy advisory firms, SSgA has provided specific guidance relating to the number of years of service it deems to be excessive, based on comparison with the average director term for the particular market.
4 years 8 months ago
Posted by Kathy Bazoian Phelps     In a case arising out of the Bernard Madoff Ponzi scheme, the United States Tax Court recently considered whether federal estate tax must be paid on the amount identified on the Madoff account statement at the time of the death of the decedent account holder, or whether no tax is owed because the account really had nothing in it. Kessel v. Commissioner of Internal Revenue, 2014 Tax. Ct. Memo LEXIS 98 (May 21, 2014).     Although no definitive answers were provided because the court simply denied the IRS’s motion for summary judgment, the opinion is thought-provoking nonetheless. The facts are that Bernard Kessel, the decedent, had an account with Madoff that was valued at $4.8 million at the time of his death in 2006. We now know that the account was actually worthless at that time because Madoff never actually invested in any securities. Kessel’s estate paid about $1.9 million in federal estate tax, but then sought a refund after the Madoff fraud was revealed in 2008.     The executrix of Kessel’s estate had had the Madoff account appraised by an appraisal service and, based upon that report, the estate paid the tax owing. Following the demise of the Madoff scheme in 2008, however, the estate sought to recover the assets in the Madoff account.

Read More from: The Ponzi Blog

4 years 8 months ago
By: Justin A. Saporito, Law Clerk Bradford & Byrd Associates, Inc. filed for voluntary Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of New Jersey on May 23rd, 2014.  The case has been assigned to the Honorable Christine M. Gravelle under case number 3:14:bk-20478. Debtor claims assets of less than $50,000 with liabilities ranging between $500,000 and $1 million.  Among debtor’s 21 creditors are the Internal Revenue Service, New Jersey Department of Labor, New York State Workers Compensation Board, Mercedes Benz, and several other companies and private individuals.  Debtor is represented by Bunce Atkinson of Atkinson & DeBartolo, PC from Red Bank, New Jersey.
4 years 9 months ago
The Fifth Circuit has reversed a Bankruptcy Court's decision to impose death penalty sanctions against a creditor where the lower court found that "the very temple of justice has been defiled." The Bankruptcy Court had found that the actions of an attorney who was the Cadle Company's long-time lawyer and was representing the Trustee as special counsel could be imputed to Cadle.   The Fifth Circuit, on the other hand, found that the attorney was not acting as Cadle's attorney and that the Bankruptcy Court had acted without clear and convincing evidence of bad faith. No. 13-10325, The Cadle Company v. Moore (5th Cir. 1/9/14). The Fifth Circuit opinion can be found here, while my prior post can be found here.While the Bankruptcy Court was outraged at the apparent duplicity by the Cadle Company and its attorney, the Fifth Circuit was mildly concerned with the attorney's non-disclosures but did not attribute them to Cadle. While the Bankruptcy Court drafted a 52 page opinion which set forth its findings in detail, the Fifth Circuit devoted just 6 1/2 pages to its discussion of the merits. The Fifth Circuit dismissed the Bankruptcy Court's extensive findings as nothing more than imputed bad faith and suspicion. The two opinions are a bit like the parable of the blind men and the elephant.
4 years 9 months ago
I've been meaning to do some research on multiemployer pension plans and how they are treated in bankruptcies, mainly because as an investor, it is difficult to value a company that participates in one of these plans. In this post, I will give a background of multiemployer pension plans, their challenges, and proposed reforms. In the next post, I will discuss liability disclosures and valuation of companies from an investment standpoint. Hostess is a good case study for this topic because we see the impact of a bankruptcy on other employers that contribute to the multiemployer pensions. When Hostess filed for bankruptcy in 2012, the world was aghast at the possibility losing the "golden sponge cake with creamy filling" called the Twinkie. The filing came just a few years after completing a an earlier restructuring and purchase by Ripplewood Holdings. The pastry maker cited pension and medical benefits obligations for its financial downfall. At the time, Hostess employed 18,500 employees, 83% of which were were union members. BloombergThen, Apollo and Metropoulos used their resurrection stone to bring back the famed confectioner from the dead.
4 years 9 months ago