Description
The Delaware courts reached a decision in 2021 that veers from the most recent guidance on how Caremark is being interpreted. The decision in Wellspring is a cautionary tale for the fiduciaries of a distressed or potentially distressed corporation, particularly with respect to negotiations around release and/or indemnification provisions for those same fiduciaries.
Corporate counsel will need to advise directors and officers on how their activities may be evaluated against their duty of loyalty to the company. The decision in Wellspring is an important reminder for directors and officers as to how both process and substance matter in restructuring negotiations. Particularly where negotiations may involve releases, indemnification, or similar provisions, counsel must be conscious of the ever-present tendency for counterparties to exercise "20/20 hindsight." Wellspring reinforces the importance of disinterested governance and arm's length dealing with the restructuring process.
As to the need for independent directors, the company at issue had disinterested governance. The Wellspring decision is neither unique nor unusual. Corporate counsel will need to know how to engage with their clients and advise on negotiating any number of transaction alternatives and terms. But Wellspring may establish a precedent that undermines the ability to negotiate for what is customary and, indeed, necessary protections for corporate decisionmakers in those same transactions, such as releases, indemnity, or exculpation.
Listen as our expert panel discusses how corporate decisionmakers face choosing a path where outcomes are at best uncertain and how Wellspring and its evolution from Caremark guides how directors and officers need to comply with the duty of loyalty. The panel will address how Wellspring can help establish best practices for all corporate stakeholders regarding releases and anticipate future expectations and scrutiny of director and officer conduct.
Presented By
Mr. Feltman is a managing director in the Restructuring Advisory practice. His practice is focused on providing fiduciary, advisory consulting and expert witness testimony in the areas of insolvency, restructuring, money laundering, Ponzi schemes, asset tracing and recovery, accounting and financial statement reporting issues, causes of action against officers, directors and third parties, securities fraud, misrepresentation, and hedging and trading in complex securities schemes.
Ms. Primoff has more than 25 years of experience representing companies, lending groups, syndicate agents, global financial institutions, and private credit investors in complex U.S. domestic and cross-border out-of-court restructurings, prepackaged Chapter 11 cases and contentious Chapter 11 cases as well as related litigation matters. She has substantial cross-border insolvency experience (including Chapter 15 cases and parallel proceedings). Ms. Primoff is regularly called upon by her clients to act as “first chair” trial counsel in contentious restructuring matters and insolvency related litigations. She has deep expertise in metals and mining, energy and infrastructure, consumer products, financial services, agriculture, entertainment, media, communications, shipping, and health care (including device manufacturing and distribution).
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Thursday, May 5, 2022
- schedule
1:00 p.m. ET./10:00 a.m. PT
- History of director liability
- Caremark decision
- Wellspring decision
- Director releases
- Duty of loyalty
- Best practices
The panel will address these and other key topics:
- How was the decision in Wellspring a departure from Caremark?
- How can companies incorporate disinterested governance and directors when negotiations conflict with a duty of loyalty?
- When can directors seek release from liability without violating a duty of loyalty?
- What does the decision in Wellspring mean for the future evaluation of director conduct?
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