For a distressed company running low on capital, an investment from insiders may represent a last best hope for survival. Insiders may be willing to risk throwing good money after bad for a chance to save the company even when any third party would stay safely away. Insiders of a failing company may also have an ulterior motive for making an eleventh hour capital infusion, as they may use their control over a distressed company to enhance their position relative to the company’s other creditors. The line between a good faith rescue and bad faith self-dealing is often a hazy one. Continue reading
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Recent Posts
- Controversial Safe Harbor: Supreme Court to Address Circuit Split of Clawback Protection in Bankruptcy Code
- Ninth Circuit Rules That A Purchaser of An Insider’s Claim Should Not Be Deemed an Insider for the Purposes of Voting on a Plan of Reorganization
- Rough Waters Could Be Ahead for Those Seeking Protection of Section 546(e) Safe Harbor
- Lack of Knowledge is No Defense: Seventh Circuit Strips Bank’s Lien on More than $300 Million in Assets
- Illinois Bankruptcy Court Articulates Low Threshold for Equitable Subordination of Insider Secured Loan
- A Holiday Present from the Third Circuit? The Court of Appeals Upholds a Secured Lender’s “Gift” to General Unsecured Creditors Under Narrow Circumstances
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