Insights

On February 19, 2020, the Small Business Reorganization Act came into effect and Debtors with aggregate liabilities that do not exceed $2,566,050 were provided an opportunity to resolve their outstanding liabilities. But even before the SBRA could see its first successes (or failures), the Coronavirus Aid, Relieve and Economic Security Act of 2020 increased a small business’s debt threshold to $7.5 million.

On June 2, 2022, the Securities and Exchange Commission charged the Town of Sterlington, Louisiana, its former mayor, Vern A. Breland, the town’s unregistered municipal advisor, Twin Spires Financial LLC and its owner, Aaron B. Fletcher with fraud in connection with the sale of $5.8 million in municipal bonds in two offerings in 2017 and 2018. 

The 2022 update of Chapman's marketplace lending guide discusses developments affecting the marketplace lending industry.

The Delaware Supreme Court is currently considering an appeal of a series of decisions by the Court of Chancery which held that a vote of a majority of shareholders is not required for an insolvent company to transfer its assets to its secured creditors.

This article in the Journal of Corporate Renewal, authored by Chapman Partner Scott A. Lewis, outlines the legal developments stemming from Puerto Rico's economic crisis. 

As interested parties look for more direction on Environmental, Social and Governance (“ESG”) matters, the Loan Syndication and Trading Association (“LSTA”) recently issued new Guidance for Green, Social, and Sustainability-Linked Loans External Reviews (“External Review Guidance”) and Guidance on Social Loan Principles (“Social Loan Principle Guidance”). A summary of this guidance is below.

At the urging of investors and in accordance with the Biden Administration’s climate agenda, the United States Securities and Exchange Commission (“SEC”) yesterday issued long-awaited new proposed rules to increase climate-related disclosures. The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Proposed Rule”), if finalized, would amend the SEC’s rules under the Securities Act of 1933 and Securities Act of 1934 to require that registrants provide robust climate related information in their registration statements and annual reports. The rule would apply to all domestic and foreign companies required to be registered with the SEC.

On February 10, 2022, the Securities and Exchange Commission (the “SEC”) proposed amendments to certain rules and regulations under the Exchange Act of 1934, as amended (the “Exchange Act”), that govern beneficial ownership reporting (the “Proposed Amendments”).¹ The SEC provided that updating these reporting requirements for modern advances in the securities market will reduce information asymmetries and promote transparency and address the timeliness of key filings. Specifically, the Proposed Amendments are aimed at, among other things: (i) shortening deadlines regarding filing of Schedule 13D and Schedule 13G; (ii) clarify how certain derivatives acquired with control intent are treated with respect to beneficial ownership reporting; and (iii) clarify when a “group” is formed for purposes of beneficial ownership reporting.

The Public Finance Initiative (PFI) and the National League of Cities (NLC) have launched the Bond Markets and Racial Equity Project to identify the factors in a municipal bond issuance that signal progress toward racial equity and income equality to investors and other stakeholders. Additionally, PFI and NLC will use the Project to develop resources that can be used by governmental issuers to center racial equity in municipal bond-funded infrastructure investments and to measure how social determinants of equity change over time on a uniform basis. The unprecedented Project is funded by a $4M grant from the Robert Wood Johnson Foundation. By funding the Project, the Foundation aims to help issuers leverage the municipal bond market in a meaningful way to help correct racial and economic inequities. 

The proliferation of investments in small, family-owned and mid-cap companies by private equity funds has led to changes in corporate governance provisions in the acquired companies’ organizational documents. Some private equity funds team up with existing management and take a minority position in the acquired company, while others will make an investment only if they can acquire controlling interest or 100 percent ownership of a company. In cases where a fund acquires a controlling interest in a company, it will often populate the company’s governing body with the fund’s principals or employees and the company’s chief executive. The fund may also seek to add outside directors with industry expertise to help govern the company. Where a private equity fund acquires a non-controlling interest, it will often seek to protect its investment by having consent and/or veto rights for certain significant transactions – for instance, the incurrence of debt, issuance of additional equity, and acquisition or disposition of assets. Thus, the organizational documents of a company may contain provisions restricting certain activities without the requisite consent of certain directors or equity holders.

On February 19, 2020, the Small Business Reorganization Act came into effect and Debtors with aggregate liabilities that do not exceed $2,566,050 were provided an opportunity to resolve their outstanding liabilities. But even before the SBRA could see its first successes (or failures), the Coronavirus Aid, Relieve and Economic Security Act of 2020 increased a small business’s debt threshold to $7.5 million.

On June 2, 2022, the Securities and Exchange Commission charged the Town of Sterlington, Louisiana, its former mayor, Vern A. Breland, the town’s unregistered municipal advisor, Twin Spires Financial LLC and its owner, Aaron B. Fletcher with fraud in connection with the sale of $5.8 million in municipal bonds in two offerings in 2017 and 2018. 

The 2022 update of Chapman's marketplace lending guide discusses developments affecting the marketplace lending industry.

The Delaware Supreme Court is currently considering an appeal of a series of decisions by the Court of Chancery which held that a vote of a majority of shareholders is not required for an insolvent company to transfer its assets to its secured creditors.

Legally Israel 100 ranks Chapman among the Top 10 Israel Practices in Capital Markets and Real Estate for Israeli financial institutions and investors in the US

This article in the Journal of Corporate Renewal, authored by Chapman Partner Scott A. Lewis, outlines the legal developments stemming from Puerto Rico's economic crisis. 

As interested parties look for more direction on Environmental, Social and Governance (“ESG”) matters, the Loan Syndication and Trading Association (“LSTA”) recently issued new Guidance for Green, Social, and Sustainability-Linked Loans External Reviews (“External Review Guidance”) and Guidance on Social Loan Principles (“Social Loan Principle Guidance”). A summary of this guidance is below.

At the urging of investors and in accordance with the Biden Administration’s climate agenda, the United States Securities and Exchange Commission (“SEC”) yesterday issued long-awaited new proposed rules to increase climate-related disclosures. The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Proposed Rule”), if finalized, would amend the SEC’s rules under the Securities Act of 1933 and Securities Act of 1934 to require that registrants provide robust climate related information in their registration statements and annual reports. The rule would apply to all domestic and foreign companies required to be registered with the SEC.

On February 10, 2022, the Securities and Exchange Commission (the “SEC”) proposed amendments to certain rules and regulations under the Exchange Act of 1934, as amended (the “Exchange Act”), that govern beneficial ownership reporting (the “Proposed Amendments”).¹ The SEC provided that updating these reporting requirements for modern advances in the securities market will reduce information asymmetries and promote transparency and address the timeliness of key filings. Specifically, the Proposed Amendments are aimed at, among other things: (i) shortening deadlines regarding filing of Schedule 13D and Schedule 13G; (ii) clarify how certain derivatives acquired with control intent are treated with respect to beneficial ownership reporting; and (iii) clarify when a “group” is formed for purposes of beneficial ownership reporting.

Chapman's Hillary Phelps is serving as Vice Chair of the National Association of Bond Lawyers (NABL) U Presents The Institute. Chapman's Brent Feller is speaking on the panel, "Capitalizing on Financing Interest."

The Public Finance Initiative (PFI) and the National League of Cities (NLC) have launched the Bond Markets and Racial Equity Project to identify the factors in a municipal bond issuance that signal progress toward racial equity and income equality to investors and other stakeholders. Additionally, PFI and NLC will use the Project to develop resources that can be used by governmental issuers to center racial equity in municipal bond-funded infrastructure investments and to measure how social determinants of equity change over time on a uniform basis. The unprecedented Project is funded by a $4M grant from the Robert Wood Johnson Foundation. By funding the Project, the Foundation aims to help issuers leverage the municipal bond market in a meaningful way to help correct racial and economic inequities. 

The proliferation of investments in small, family-owned and mid-cap companies by private equity funds has led to changes in corporate governance provisions in the acquired companies’ organizational documents. Some private equity funds team up with existing management and take a minority position in the acquired company, while others will make an investment only if they can acquire controlling interest or 100 percent ownership of a company. In cases where a fund acquires a controlling interest in a company, it will often populate the company’s governing body with the fund’s principals or employees and the company’s chief executive. The fund may also seek to add outside directors with industry expertise to help govern the company. Where a private equity fund acquires a non-controlling interest, it will often seek to protect its investment by having consent and/or veto rights for certain significant transactions – for instance, the incurrence of debt, issuance of additional equity, and acquisition or disposition of assets. Thus, the organizational documents of a company may contain provisions restricting certain activities without the requisite consent of certain directors or equity holders.