Changes to Partnership Tax Audit Rules Will Impact Many Delaware Alternative Entities

1.21.2016 - Client Alerts - Commercial

New rules for partnership tax audits (the “New Rules”) were adopted that may require changes to the governing documents of existing and future partnerships, limited liability companies and other entities taxed as partnerships for federal income tax purposes. The issues relating to existing entities are likely to be particularly difficult as the governing documents for most existing entities do... Continue Reading

Private Company Deal Alert: Fraud Disclaimers, "Threatened" Claims and Sandbagging in Delaware

In the last quarter of 2015, the Delaware courts issued three opinions and one oral ruling of importance to practitioners advising on private company transactions. Two of the opinions provide insight into the treatment of fraud claims in the acquisition context under Delaware law, especially the element of reliance, and how to successfully disclaim reliance on representations outside the... Continue Reading

Financial Advisor Engagement Letters: Post-Rural/Metro Thoughts and Observations

Much ink has been spilled discussing the factual and legal underpinnings of the Court of Chancery’s opinions in the Rural/Metro litigation. It seems the phrase “in doing so, they function as a gatekeeper” has attracted more attention over the past year than any other phrase in a Delaware opinion since “the directors of Trans Union breached their fiduciary duty” in Van Gorkom. This... Continue Reading

Recurring Issues for VC and PE Funds: Guidance from Recent Delaware Cases

A periodic "heads-up" of legal developments in Delaware relevant to venture and private equity funds... Director conflicts of interest: Courts skeptical that a fund’s board designee is conflicted due solely to the position of the fund (e.g., winding down, or interested in participating in future deals) ... but specific allegations that fund has materially different interest than... Continue Reading

Benefit Corporations: Good for Shareholders and Stakeholders

In recent weeks, benefit corporations have been in the news. First KickStarter, a well-known funding platform for creative projects, announced that it had amended its charter to become a benefit corporation. Paul Polman, CEO of Unilever announced he was going to work toward bringing Certified B Corporations (which must adopt the benefit corporation structure or its equivalent) to multinationals... Continue Reading

Delaware Bankruptcy Court Adopts the “Time” Approach to Lease Rejection Damages

Recently, Judge Kevin Carey of the United States Bankruptcy Court for the District of Delaware issued the first written opinion in the District of Delaware resolving the “time versus rent” debate and interpreting section 502(b)(6) of the Bankruptcy Code in Delaware, an issue that is important to both debtors and commercial landlords. In In re Filene’s Basement, LLC, 2015 Bankr. LEXIS 1350... Continue Reading

Directed Trusts: Panacea or Plague? (republished)

Directed trusts have become commonplace over the last decade. There are only nine states that haven’t enacted some form of directed statute, and among those, several are considering such legislation. Section 808 of the Uniform Trust Code (UTC) implements the concept, and the Uniform Law Commission recently empanelled a Divided Trusteeship Committee to draft a modern uniform directed trust... Continue Reading

Analysis of the 2015 Amendments to the Delaware General Corporation Law

The 2015 amendments to the Delaware General Corporation Law (the “DGCL”) were recently enacted. The amendments address important policy topics (such as prohibiting charter- or bylaw-imposed “loserpays” fee-shifting provisions for stockholder litigation and expressly permitting charter- or bylaw-imposed exclusive forum selection provisions). The amendments also make certain technical... Continue Reading

Trust Act 2015 Legislative Update

On July 10, 2015, Delaware Governor Jack Markell signed Senate Bill 42 into law effective immediately, then on August 7, 2015, Governor Markell signed House Bill 164 into law effective as of August 1, 2015.  Those laws (collectively “Trust Act 2015”) provide many advancements in Delaware trust law. Settlors, beneficiaries and fiduciaries of trusts now have more tools and... Continue Reading