Shifting Board Duties for Corporations Operating within the "Zone of Insolvency"

Publication date Summer 2009

Given the current economic climate, members of the Business Law Section are likely seeing an increased number of their clients worrying about thin cash flow and the threat of insolvency. Business clients often have reason to worry beyond their own balance sheets: the financial health of customers, distributors, and others in a company's chain of business is critical as that company awaits payment for valuable goods delivered and services rendered.

Commercial Real Estate Financing: The Borrower's Perspective

Publication date July 2009

Tough times notwithstanding, there are ways for the commercial real estate borrower to use the lending process to its advantage. We are living through difficult economic times, and every day there seems to be more bad news about the commercial real estate market. The numbers aren’t encouraging. A recent newspaper article reported that: “Commercial property sales plunged 73% last year, according to Real Capital Analytics. Vacancy rates are rising, and hundreds of large properties are in default. The American Institute of Architects’ billing index, a leading indicator of construction six months ahead, is at a record low. Unemployment in the construction industry is 15.3%, well above the average 7.2% jobless rate.”

Infinite Control for Majority Shareholders?: Sound Infiniti, Inc. v. Snyder

Publication date Winter 2008-2009

The cash-out of minority shareholders during a merger, consolidation, or other fundamental corporate change is not uncommon. When the fundamental change is engineered by controlling shareholders for the apparent purpose of eliminating minorityshareholders, however, questions of fiduciary duty and fair value often arise. Jurisdictions vary in whether controlling shareholders need "business" reasons to undertake such fundamental changes, and what remedies squeezed-out shareholders may pursue. A recent Washington Court of Appeals opinion makes clear that in Washington, controlling shareholders can effect fundamental corporate changes for the sole purpose of removing minority shareholders, and barring certain narrow exceptions, the minority shareholders' only remedy is to receive the "fair value" of their shares.