In House - The FindLaw Corporate Counsel Blog

May 2009 Archives

If you work in the legal department of a start-up funded by venture capital, odds are you have been doing financing rounds less often and raising less per round than in times past. 

Fenwick & West has backed up this anecdotal observation with a survey containing some less-than-encouraging numbers for Silicon Valley tech firms that rely on VC. 
GM bondholders agreed to accept a sweetened ownership deal, but the company still appears to be speeding towards a Chapter 11 bankruptcy filing.

The deal, which bondholders approved earlier today, offered the bondholders the same 10 percent stake in a reorganized GM that the company had offered before, but this time GM added warrants to purchase up to 15 percent of the company if the bondholders sign off on a fast-track bankruptcy and asset sale backed by the US Treasury.

GM Is Running Out of Gas, Will Likely Declare Bankruptcy

GM said before a crucial vote by bondholders on a tender offer of stock for debt that the company would declare bankruptcy if the bondholders rejected its offer.

The bondholders did, but so far GM hasn't filed any Chapter 11 papers.  Most analysts seem to think that it's only a matter of time, however.  One reason for the delay could be that the company is trying to get approval from the United Auto Workers for a new set of concessions.

In the meantime, GM has already begun bundling its European operations under its German company, Adam Opel, in order to facilitate a sale of the business.

Supreme Court Agrees to Hear Vioxx Case

The Supreme Court has agreed to hear Merck's appeal of a 3rd Circuit decision allowing a shareholder suit over the painkiller Vioxx, in what will likely become an important case for shareholder suits of all kinds.

The question presented is when the two year statute of limitations period for shareholder suits commences.  More precisely, exactly how much notice of wrongdoing is required before the statute begins to run?
Federal regulators have taken over Florida's BankUnited and sold it to a consortium of private equity companies, making it the biggest banking institution to fail this year.  The initial estimates place the cost of the failure to the Federal Deposit Insurance Corporation at $4.9 billion, making it the second costliest failure of the current economic crisis, behind the collapse last year of California-based IndyMac.

The story underlying the story is that the government has decided to sell the bank to a group of private equity companies, led by the Blackstone Group and the Carlyle Group.  Historically, federal regulations have prevented private equity groups from owning any more that 24.9 percent of a bank under the theory that private equity groups operate with a higher degree of risk than is appropriate for a bank.

Summary of The Credit Cardholders' Bill of Rights Act

The House of Representatives passed The Credit Cardholders' Bill of Rights Act yesterday, and sent the bill to President Obama for his signature.  President Obama has indicated that he will sign the bill (even though a provision was tacked onto the bill allowing for the possession of loaded weapons in national parks to the extent permitted under state law).

This bill is sure to provide in house counsel at credit card companies some long nights at the office soon, and some sleepless nights after that worrying about whether the company is in compliance with the new regulations.

SEC Wants to Give Dissident Shareholders More of a Voice

The SEC is starting to sound like it doesn't have much faith that shareholders will hold boards of directors accountable for their failings under the current system.

On Wednesday, the agency opened a proposal to public comment that would allow shareholders who own a certain percentage of a company's stock to place their nominees for the board on the annual proxy ballot that goes out to all the company's shareholders.

This could give small blocs of shareholders more of a say on issues like executive compensation and the levels of risky behavior that companies engage in.
How much more would you pay for a less-polluting, more fuel-efficient car? 

The Obama administration is putting the number at $1,300 for you.  That's how much the new emissions limits and fuel-efficiency standards announced by the administration and automakers will end up costing consumers per vehicle once automakers fully implement them in 2016.
The Supreme Court has agreed to hear a challenge to the Sarbanes-Oxley Act (SOX), the 2002 act that established the Public Company Accounting Oversight Board.   Congress passed SOX in response to several high-profile instances of accounting fraud earlier this decade, most notably the Enron collapse.

The board monitors the accounting industry, especially the four largest accounting firms that handle the books for many of the most prominent corporations.  The Securities and Exchange Commission chooses the board's members, with consultation by the Fed and the Treasury Department. 

Obama's Rhetoric Is Freaking American Corporations Out

Some of what President Obama has been saying recently has American corporations a little bit on edge, according to the Associated Press.

In the past few weeks, Obama has singled out credit card companies for what he characterized as "dishonest" business practices, especially those around rate increases.  The President also issued a stinging rebuke to Chrysler investors who refused to go along with the government's restructuring plan prior to the automaker's bankruptcy.  He also attacked tax benefits for companies that leave profits overseas, calling the companies "well-heeled interests."

Some see these verbal assaults as an indication that the president is exploiting populist anger over the faltering economy to his political advantage.

"It is traditional class-warfare rhetoric," said Jade West, a lobbyist for the National Association of Wholesaler-Distributors. "It's a little bit frightening."

Business representatives fear that these rhetorical flourishes signal an intent to keep business interests away from the decisionmaking process, and have pressed Obama's aides to grant them more access.

Obama seems to enjoy a certain amount of impunity for his statements, though.  After all, when he called out the Chrysler investors, they eventually agreed to get behind the restructuring plan.  And any counterattack by business interests on the President doesn't go over very well with the public. 

"Every time we test language that criticized the president by name, the response was negative, even among Republicans," wrote GOP strategist Frank Luntz.

Obama needs businesses to succeed in order to turn the economy around, so he's likely to give them considerable input, but they'll always be around as an easy target when he needs a scapegoat for the public.

That's just politics.

The HP Legal Department's State of Flux

Your computer may be personal again, but apparently the legal department at HP isn't anymore. 

This article from the Recorder describes a legal department that shifted from a stable environment for people to escape from the pressures of BigLaw and work out the rest of their careers in comfort, to a department focused sharply on performance evaluations and management re-shuffles. 

EU to Intel: "Rebate This, You Monopolist!"

It looks like the antitrust scene is starting to heat up again. 

First, Christine Varney, Assistant Attorney General in charge of the DoJ's Antitrust Division, announced that the DoJ under President Obama would pursue antitrust charges more vigorously than under the Bush administration. 

Attorney Power Couples' Loose Lips Can Spell Trouble

Now, I don't usually peruse the pages of Marie Claire, but there's an interesting article in their latest issue about the difficulties that couples face when one or both of them have access to sensitive or insider information.

While the article couches the subject in terms of pillow talk, it raises a number of ethical, legal and professional issues that arise when power couples bring their work home with them.

DoJ Is Putting the Teeth Back in Antitrust

After eight years of the federal government's laissez faire approach to antitrust issues under the Bush administration, the Obama Justice Department has announced that it will take a more aggressive stance on monopolies and anticompetitive behavior.

Christine Varney, Assistant Attorney General in charge of the DoJ's Antitrust Division, made the announcement in a speech this morning.  In her remarks, Varney stated that the Justice Department would withdraw the findings of a report on Section 2 of the Sherman Act as official DoJ policy on antitrust monopoly enforcement.

Conference: Legal Issues in the Energy Industry

This conference will be conducted by Corporate Counsel Magazine and feature a keynote luncheon address by Rep. Joe Barton (R-TX).

May 11 to 12, 2009 The St. Regis Houston - Houston, TX

The "House GOP's leading expert on energy policy" (Wall Street Journal, 10/02), Representative Joe Barton has led the House charge to pass comprehensive national energy policy legislation. In the past two congresses, he has shared authorship of the two most comprehensive energy policy packages to pass in the House since the 1930s. Barton has committed himself to passing legislation promoting an environment of high supply, low demand, consumer-friendly prices and environmental protection. A proponent of competition, Barton is additionally responsible for both the first electricity deregulation legislation to pass a House subcommittee, and for legislation which deregulated the natural gas industry.

Corporate Counsel Magazine's "Legal Issues in the Energy Industry" is designed for general counsel, senior legal in-house counsel and executives working in the Energy Industry. It will cover the latest regulatory, legal and business issues in this continuously evolving industry. This conference will cover both traditional and alternative energy industries.

Topics to Be Covered include:

  • Obama Administration Approach Towards Energy
  • Arbitration Issues in the Energy Industry - Domestic and International
  • Infrastructure and Alternative Energy
  • 2009 FERC Enforcement Issues
  • Legislative Initiatives at the State and Federal Level for Energy
  • Current Trends in Royalty Litigation:
    Private Actions
    State Actions
    Class Actions
  • Energy and Water Management Issues:
    Impact of Exploration/Production and Water Resources
  • Climate Change and Energy
  • Energy and the Environment:
    Prospects for Partnership?
Register Now >>

Banks Can Handle the Stress, Apparently

Ok, ok, I know what you're thinking: "Not another post about the government's 'stress test' for banks!"

But this one's different, I promise.  The results are finally in, and they aren't as dire as once feared.  In fact, some banks even want to start paying back some of the funds they received from the Troubled Asset Relief Program (TARP).

Newspaper Has a Good Day, Stays Alive

Today has been a rare bright spot for a deeply troubled newspaper industry that has seen a series of disasters befall it lately.

The Boston Globe announced that the paper, which is owned by the New York Times Co., reached a deal with its largest labor union, the Boston Newspaper Guild, that would allow the 137 year-old paper to continue publication.

Just how long it will be able to continue publication is another matter entirely, however.

High-Tech Will Go High-Tax Under Obama's Plan, Industry Says

The technology industry is up in arms over President Barack Obama's plans to roll back some of the tax protections for companies that enjoy the benefit of lower tax rates on profits earned outside the United States.

Tech giants Hewlett-Packard Co., IBM Corp., Cisco Systems Inc., Microsoft Corp. and Google Inc. each saved more than $1 billion through lower foreign tax rates last year, for a total tax benefit of $7.4 billion.
The prices were low, but apparently not low enough.

After a drop in sales and "significant liquidity problems" that led to a sale to the Buxbaum Group, Filene's Basement has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. 

The nation's oldest discount retailer also struck a deal that would see a Crown Acquisitions affiliate purchase 17 of Filene's Basement's 25 stores, including the original location in Boston's Downtown Crossing.
Two United States Courts of Appeals issued two wildly different opinions concerning decisions made by the National Labor Review Board today.  The DC Circuit ruled that the roughly 300 decisions handed down by the NLRB in 2008 while the Board only had two active members were invalid because the Board did not have the statutorily required quorum.

The 7th Circuit, on the other hand, completely disagreed, and upheld a challenge to an NLRB decision over arguments similar to the one relied upon by the DC Circuit.