William L. Siegel
William L. (Bill) Siegel is a Shareholder and Section Head of the Cowles Thompson Bankruptcy & Creditors’ Rights Practice Group.
Articles Written By William Siegel
Categories
Bankruptcy & the Boardroom
The fraud arose over the sale of the debtor’s and her husband’s home. The husband failed to disclose certain defects in the home. The debtor had no knowledge nor involvement in the preparation of the disclosure statement.
Corporate law generally provides that the owners of a corporation are not liable for the company’s debts. However, when there is a lack of separation between a corporation and its owners, courts may “pierce the corporate veil” and find owners to be alter egos of the corporation and liable for the corporation’s debts.
Transferability of interests in closely held entities is a topic that should not only be discussed prior to formation of the entity, but should also be addressed by separate agreements. For a corporation, such separate agreements may be via Bylaws, Shareholder Agreements, or Buy-Sell Agreements.
This question was presented to the Bankruptcy Court in Andrew v. Official Committee of Unsecured Creditors (In re Lefever Mattson Corp.), 25-1238 (9th Cir. B.A.P. June 29, 2026). Here, the court ruled that such state law and/or contractual provision violate the so-called ipso facto clause in Section 541(c)(1)(B) of the US
Creditors’ Rights & Issues
There are several defenses to a preference action, one of which is commonly referred to as the ordinary course of business defense. Essentially, the ordinary course of business defense protects a transfer if made in the ordinary course of business or financial affairs of the debtor and the transferee, known as
Director / Officer
Here, a majority of the Board of Directors had approved a tender offer based on fabricated financials prepared by a director who for all practical purposes exercised control (the “Controlling Director”) over the remaining directors (“Innocent Directors”).
Texas Two-Step (Divisive Merger)
Friday, January 30th, a US judge dismissed a lawsuit against pharmaceutical company Johnson & Johnson (J&J), wherein plaintiffs claimed J&J relied on the “Texas Two-Step” as part of its bankruptcy plan. Plaintiffs believe this strategy resulted in fraud related to bankruptcy in the J&J talc division and the judge disagreed, stating plaintiffs failed to prove any real harm caused by the delay.
Fraudulent Conveyance
In a 2024 bankruptcy proceeding (Holliday v. Credit Suisse Sec. LLC (In re Bos. Generating, LLC)), the Second Circuit Court of Appeals ruled that a properly structured leveraged buyout invoking the “Safe Harbor Rule” under Section 546(b) of the Bankruptcy Code cannot be set aside as a fraudulent conveyance.
Landlord / Tenant
For some background, a lease is considered an executory contract. An executory contract is a contract between a debtor and another party in which each party still has important performance obligations remaining. Thus, if either side ceased performing under the contract, such action would constitute a breach of contract.
Lease
“Adequate assurance of future performance” can be anything, but generally speaking, it may require a security deposit or increase of the security deposit to protect the landlord from defaults, guarantees, or such other security such as a letter of credit or certificate of deposit.
Vendor Rights
Critical vendor treatment in bankruptcy is a process that allows a debtor to pay a vendor its pre-petition claim based on the idea that the vendor is so important to the debtor’s business, that ending the relationship would make it very difficult if not impossible for the debtor to reorganize.
