LexisNexis partners with leading practitioners from across the country to develop Lexis Practice Advisor® practical guidance for transactional matters. Periodically InfoPro highlights the practical insights developed by these attorneys on specific topics in their area of expertise. These insights can be shared with your attorneys, used in your newsletters and on your intranet.
Second Lien Financings Banking & Finance Insights by Sherry Mitchell
The last 10 years have seen an evolution in second lien financings. In second lien financings, the first lien holders hold a first priority security interest on certain borrower’s assets and the second lien holder holds a second priority security interest on the same assets. In opting for a second lien financing, the borrower will benefit from, among other things, lower interest rates. However, in working through the details of a second lien financing, counsel must be cognizant of the distinction between lien subordination and payment subordination. Working through these issues, and other intercreditor issues, will result in a successful financing that benefit both lenders and borrowers.
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Sherry Mitchell, Esq., head of Lexis Practice Advisor® Banking & Finance, brings eleven years of experience to LexisNexis®, joining the team from Clifford Chance U.S. LLP.
Claims Trading Bankruptcy Insights by Cody Tray
Claims trading has grown significantly since 2003. This is evident when one examines the bankruptcy court dockets in “mega” bankruptcy proceedings. Although purchasing claims in bankruptcy can be financially advantageous, sellers and purchasers of claims must be cognizant of the notification and disclosure requirements in doing so. In addition, certain entities may be restricted from trading claims. Counsel should be aware that, in any case, there are tax consequences that must be considered, such as the debtor’s attempt to protect net operating loss attributes. Thus, counsel and clients have an array of items to consider prior to engaging in claims trading.
Learn more about claims trading:
Cody Tray, Esq., head of Lexis Practice Advisor® Financial Restructuring & Bankruptcy, brings nine years of bankruptcy experience to LexisNexis®, including experience at Davis Polk & Wardwell LLP and a clerkship with the Honorable Robert E. Gerber, SDNY Bankruptcy Judge.
Delaware Business Taxes
Business Insights by Eric Bourget
Business taxes in Delaware follow familiar models. Income tax structures for sole proprietorships, partnerships, limited liability companies and corporations generally mirror the federal system. Delaware law recognizes certain less-common entity types which may qualify the entity for special tax treatment (for example the headquarters management corporation and the Series LLC). Corporations that are formed in Delaware are required to pay an annual franchise tax. Limited liability companies, limited partnerships and general partnerships that are formed in the state of Delaware must also pay an annual tax. In addition, all businesses doing business in the state are subject to a gross receipts tax based on the total receipts of the business that are received from property sold and services rendered in the state.
Learn more about Delaware business taxes:
Eric Bourget, Esq., Lexis Practice Advisor® Team Lead and Group Director of Specialized and Corporate offerings, brings ten years of both private and in-house practice experience to LexisNexis®.
Successor Liability in Business Combinations
When planning an asset transaction, it is important to remember that the buyer may, under certain circumstances, be unable to avoid certain legal liabilities even if the buyer did not explicitly assume those liabilities in the transaction. In fact, courts have recognized several exceptions to the general rule that assets that are not specifically assumed are not transferred to the buyer. Those courts have imposed liability on the asset purchaser under certain circumstances, including where: (i) the transaction in substance amounted to a consolidation or merger of the purchaser and the seller; (ii) the purchaser was merely a continuation of the seller; or (iii) the transaction was an attempt to defraud the seller’s creditors. In California, courts have also imposed successor liability in the products liability context in situations when the seller is no longer in business after the asset purchase transaction is completed. It is worth noting that the de facto merger theory of successor liability is only applicable in California if the consideration paid for the assets consisted solely of stock of the buyer or its parent.
Learn more about successor liability in business combinations:
Emerging Issues in Creating and Perfecting Security Interests in Personal Property
In-House Insights by Eric Bourget
Security agreements, such as mortgages, usually accompany nearly every transfer of real property, but are far less common in transactions involving goods and other personal property. While the UCC itself is simply a model code with no legal force, nearly every state in the United States has adopted some version of the UCC as its commercial code. However, various versions of the code exist and states do frequently modify some of its provisions. Accordingly, it is crucial that counsel stay abreast of recent developments and case law when handling a transaction for a client involving UCC issues.
Learn more about emerging issues in creating and perfecting security interests in personal property:
Developing Pre-enforcement Measures to Protect Patent Rights IP & Technology Insights by Lindsay Bringardner
Patents are a significant and extremely valuable aspect of many companies’ intellectual property portfolios. Thus, it is crucial for companies to protect those rights by considering and implementing an enforcement strategy that meets their business objectives. At a minimum, companies should develop an effective policing strategy to identify potential patent infringements and derive the maximum value from their patented technology. After identifying potential infringement, companies should conduct a thorough investigation into the alleged infringer and analyze the patent infringement and validity issues prior to taking any enforcement measures.
Learn more about developing pre-enforcement measures to protect patent rights:
Lindsay Bringardner, Esq., head of Lexis Practice Advisor® Intellectual Property & Technology, brings twelve years of legal experience to LexisNexis®, including experience at Latham & Watkins LLP and Pryor Cashman LLP.
Employment and Technology Labor & Employment Insights by Carrie Wright
The fast pace of technological advancements and evolving online practices require that employers proactively adopt policies that address employee privacy issues, device ownership, the confidentiality and ownership of the employer’s information, the requirement that employees adhere to all employment policies while using the technology, as well as other issues.
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Carrie Wright, Esq., head of Lexis Practice Advisor® Labor & Employment, brings nearly fifteen years of legal experience to LexisNexis®, including experience at Epstein Becker & Green, P.C., Paul, Weiss, Rifkind, Wharton & Garrison LLP and Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C.
Intellectual Property in Joint Ventures M&A Insights by Dana Hamada
Companies often form joint ventures with other companies to develop intellectual property assets. When forming such a joint venture, the parties must ensure that the structure, scope and management of the joint venture properly reflect the parties’ intended relationship. Moreover, the parties may want to enter into a joint development agreement, or JDA, to address their rights and obligations specifically with respect to the intellectual property assets being developed in the joint venture. The JDA should cover ownership of the initial IP contributed to the joint venture, ownership of any IP that is subsequently created by the joint venture and licensing rights.
Learn more about intellectual property in joint ventures:
Dana Hamada, Esq., head of Lexis Practice Advisor® Mergers & Acquisitions, brings a wealth of legal experience to LexisNexis®, joining the team from Jenner & Block LLP and Gibson, Dunn & Crutcher LLP.
Taxes to Real Estate Purchase and Sale Transactions Real Estate Insights by Richard J. Sobelsohn
Real estate purchase and sale transactions may trigger various types of taxes. In most states, transfers of real estate are subject to a deed transfer tax, which is typically based on the amount of consideration paid. Additionally, in some states, purchasers who finance their acquisition may incur a mortgage tax, which is usually based on the amount of debt secured by the mortgage. The amount and applicability of taxes varies from state to state, and certain organizations and types of transfers may be exempt.
Learn more about taxes to real estate purchase and sale transactions:
Richard J. Sobelsohn, J.D., GGP, LEED Accredited Professional, Team Lead and Group Director of Lexis Practice Advisor® Financial Practice Area Modules, brings almost sixteen years of both private and in-house practice experience to LexisNexis®.
Understanding At-the-Market Offerings Securities Insights by Ron Llewellyn
At-the-Market offerings (“ATMs”) provide publicly traded companies an efficient way to raise capital over time. ATMs have become more and more common recently as issuers seek alternatives to traditional offerings. It provides issuers with flexibility, control, discretion and protection from the many inefficiencies found in the more traditional underwritten issuance model, including negative price impact, discounted purchases, substantial underwriting spreads and management attention. Learn more about at-the-market offerings:
Ron Llewellyn, Esq., head of Lexis Practice Advisor® Securities & Capital Markets, brings a wealth of expertise to LexisNexis®, including experience at Skadden, Arps, Slate, Meagher & Flom LLP, MasterCard Incorporated and Saks Incorporated.