Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates

246 Pages·2010·1.18 MB·English

Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates
Skadden, Arps, Slate, Meagher & Flom LLP
& Affiliates
2010 InsIghts EdItorIal Board
Thomas H. Kennedy / Head of Global Knowledge Strategy
Lorenzo Corte / K. Kristine Dunn / Stuart M. Finkelstein /
Amy R. Sabrin / Ivan A. Schlager
This collection of commentaries provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates is for educational and informational purposes
only and is not intended and should not be construed as legal advice. These commentaries are considered advertising under applicable state laws.
III
Dear Clients and Friends:
I am pleased to attach our second annual collection of commentaries on what we perceive to be the
critical legal issues facing our clients in 2010. Policy makers around the world took extraordinary steps
in 2009 to stabilize the global economy in the face of an unprecedented economic crisis. Many of these
steps were both controversial and justified as emergency provisions necessary to foster stability.
As our clients and friends look to 2010, we see several macro themes that may have profound legal
applications: First is how government will use, further broaden or change its newly expanded powers;
second is how the global capital markets will respond to the new environment, including new intrusions
by government into formerly unregulated areas; and third is how controversies between government
and the private sector as well as controversies within the private sector will be affected and what
strategies various parties will use to assert and protect their interests.
The commentaries are arranged into eight broad sections. While every piece will not be of interest to
all, we hope the range of subjects covered will provide you with timely and pertinent information to
help you meet the challenges and capitalize on the opportunities ahead.
• Capital Markets. The area of most direct interest to many of our clients is how the current financial
environment may impact capital structure and the ability to raise capital. We recommend both advance
planning and preventive measures that are applicable to most entities. We also examine opportunities
created by the turmoil in financial markets and its impact on various capital markets sectors.
• Corporate Restructuring. It is generally expected that 2009’s wave of corporate restructuring
activity will continue in 2010. We provide information on various techniques that can assist both
stressed entities looking to restructure their balance sheets and other entities seeking to benefit
from that stress.
• Emerging Markets. As we did last year, we highlight certain developments in Brazil, China, India
and Russia that continue to present great opportunities to our clients. We also discuss certain risks
in those and other emerging markets more broadly.
• Governance. The financial and economic crises of the past few years and the response of various
governmental bodies and other regulatory constituencies once again spotlight the importance of
proper corporate governance. We explore subjects confronting directors and members of manage-
ment in a series of pieces that assess trends and offer guidance on a range of issues, including
executive compensation, shareholder activism, risk management and changes to governance
processes.
• Intellectual Property and Information Technology. We address a number of areas of interest
related to intellectual property and information technology, which we believe remain key economic
drivers going forward.
• Litigation/Controversy. Resolution of disputes continues to become more global and complex.
We discuss recent developments, the direction of various trends and likely strategies for managing
disputes.
• M&A/Transactions. In 2009, global M&A and other transactional activity was somewhat con-
strained by the challenging financial and economic environments. Although it is hard to predict
magnitude, we believe the global M&A and certain other transactional markets will see increased
activity in 2010. We review a spectrum of issues faced in U.S., European, Asian and other M&A,
energy and real estate transactional arenas.
• Regulatory. In the United States, the European Union, Asia and elsewhere, shifting governmental
priorities in response to a variety of factors should impact our clients in a wide range of industries.
We assess these developments in a variety of governmental arenas.
We hope you find these materials interesting and informative and would be happy to further
discuss them with you. If you have a particular interest in any of these topics, please call your
usual Skadden, Arps contact.
With best wishes for peace and prosperity in 2010,
Eric J. Friedman
Executive Partner
Table of Contents
(Click on a title below to read the article.)
Capital Markets
Corporate Finance | What We Expect ......................................................................................................1
Corporate Finance | Equity-Linked and Other Financial Products .............................................................5
Derivatives | Enforceability of Counterparty Arrangements Post-Lehman ...............................................7
Hedge Funds | Key Issues ........................................................................................................................9
Investment Management | Impact of Jones v. Harris Associates on Fund Advisory Fees ....................13
Leveraged Finance | Recent Developments in Financing Commitments ...............................................15
Private Equity Funds | Key Issues ...........................................................................................................17
Structured Finance | New Securitization Accounting Rules and
Their Implications for Bank Capital and Legal Isolation ..........................................................................21
Structured Finance | Lessons for the CMBS Market and the Securitization World
in the General Growth Properties Bankruptcy ........................................................................................25
Structured Finance | Lehman Challenges the Subordination of
Derivatives Payments in Structured Products ........................................................................................27
Corporate Restructuring
The ‘Wall of Debt’: Identifying and Developing Long-Term Business Solutions
for Near- and Medium-Term Debt Maturities ........................................................................................33
Fiduciary Duties in the Distressed World ..............................................................................................35
Recent Trends in Balance Sheet Restructurings
Utilizing Reinstatement in Bankruptcy ....................................................................................................37
Increased Use of ‘Prepackaged’ and ‘Prearranged’ Bankruptcy Strategies ..........................................39
Fraudulent Transfer Issues .....................................................................................................................41
Opportunities and Developments in Credit Bidding ..............................................................................43
Intercreditor Issues: Subtle Variations, Palpable Risk Differences ........................................................45
Cross-Border Issues: Distressed Companies in a Global Environment ..................................................47
Potential Changes to the Bankruptcy Code ...........................................................................................49
Sectors to Watch ....................................................................................................................................51
Emerging Markets
Brazil | Accelerating Activity in 2010 ......................................................................................................55
China | Anti-Bribery Compliance for Multinational Companies Doing Business in the PRC ...................57
China | Outbound Investments: Beyond Hunting for Resources ...........................................................59
India | Will New Government Continue to Improve Investment Environment? ......................................61
Russia | Legislative Developments — New Opportunities for Cross-Border M&A Transactions ..........63
Liabilities in Developing Country Investments: Recent Experiences of U.S. Companies .....................65
Governance
U.S. Corporate Governance | Washington’s Reform Agenda ................................................................69
U.S. Corporate Governance | Increasing Shareholder Activism and
Board-Shareholder Communications ......................................................................................................73
U.S. Corporate Governance | A Renewed Focus on Board Assessment of Enterprise Risk ..................75
U.S. Executive Compensation | The Financial Crisis’s Legacy of Change? ............................................79
French Corporate Governance | Implementing Binding Regulations on Bonuses ..................................81
German Corporate Governance | New Rules for Management Remuneration and D&O Insurance ......83
UK Corporate Governance | Proposed Revisions to the UK Combined
Code on Corporate Governance ............................................................................................................85
Raising the Bar | A Self-Help Program for Re-Establishing Director Credibility and
Combating Federal Preemption of State Corporate Law ......................................................................89
Raising the Bar | A Postscript ................................................................................................................95
Intellectual Property and Information Technology
Privacy and Data Security .....................................................................................................................101
Copyright and Digital Media Litigation ..................................................................................................103
An Uncertain Future for Business Method Patents ..............................................................................105
Trademark and Related Intellectual Property Considerations in Mobile Phone Applications ..............107
Hybrid Outsourcing ..............................................................................................................................109
Litigation/Controversy
U.S. Supreme Court Cases to Watch ...................................................................................................113
Securities Class Action Filings Remain High ........................................................................................115
Credit Default Swap and CDO Litigation on the Rise ...........................................................................117
Iqbal’s ‘Tightened’ Pleading Standards Subject to Debate and Potential Legislation ...........................119
Class Action Fairness Act Developments.............................................................................................121
The White Collar Crime Law Enforcement Agenda..............................................................................123
Mass Torts and Consumer Class Action Trends ...................................................................................127
The Stolt-Nielsen Case and the Future of ‘Class Action Arbitration’ ....................................................131
Increased Recoveries in Whistleblower Actions and Expansion of the False Claims Act’s Reach ......133
The Year of ‘Foreign-Cubed’.................................................................................................................135
Maximizing Treaty Protection for Foreign Direct Investments .............................................................137
Using National Courts to Obtain Injunctive Relief in Support of International Arbitration ....................139
M&A/Transactions
U.S. M&A | Strategic Deal Activity Gains Momentum as Market Challenges Persist ..........................143
U.S. M&A | Deal Certainty: Breakdown in the Distinction Between
Private Equity and Strategic Deals ........................................................................................................145
U.S. M&A | Delaware Law Developments ...........................................................................................149
U.S. M&A | Disclosure Issues: Titan and Bank of America ..................................................................153
U.S. M&A | Hostile Transactions ..........................................................................................................155
U.S. M&A | Preserving the ‘Benefit of the Bargain’ for Target Shareholders
in a World of Unintended Consequences .............................................................................................157
U.S. M&A | Trends to Watch in Technology .........................................................................................161
U.S. M&A | Recent Developments in Private Equity Transactions .......................................................163
Europe M&A | Use of Stock Consideration in Acquisitions by U.S. Bidders ........................................167
Europe M&A | UK Bids — How a Scheme of Arrangement May Unlock a Target Board
That Repeatedly Says ‘No’ ...................................................................................................................171
Asia M&A | Opportunities for Public Stock Deals in Hong Kong ..........................................................175
Asset Management | Navigating the Sea Change ................................................................................177
Bank M&A | Industry Recapitalization and Failed Bank Deals to Continue ..........................................179
Insurance | Key Developments and Deals in the Insurance Industry ...................................................183
Energy and Infrastructure Projects | The Continuing Effects of the Financial Crisis
on Growth Potential ..............................................................................................................................185
Real Estate | Challenges to Real Estate Transactions and REITs ..........................................................191
Regulatory
Antitrust | A New Era of Convergence? ................................................................................................195
Antitrust | Trends in Japanese Anti-Monopoly Act Enforcement .........................................................199
Climate Change | U.S. Climate Policy Debate to Heat Up Post-Copenhagen ......................................201
Communications | A New Focus at the FCC .......................................................................................203
Consumer Financial Services | Is There a New Federal ‘Watchdog’? .................................................205
Derivatives Regulation | House Bill Sets Up Senate Consideration of New Regulation .......................207
Energy Regulation and Litigation | Policy Trends .................................................................................209
Financial Institutions Regulation | Anti-Money Laundering and Sanctions Developments ...................211
Foreign Investment Controls | The Obama Administration...................................................................213
Foreign Investment Controls | Europe ..................................................................................................215
Government Affairs and Government Procurement Compliance .........................................................219
Health Care | Key Trends Affecting the Legal and Regulatory Environments .......................................221
Labor and Employment Law | Looking Ahead ......................................................................................225
SEC Enforcement | New Initiatives ......................................................................................................229
Tax | Monitoring New Developments and Careful Planning Amidst Uncertainty .................................231
Capital Markets
Corporate Finance | What We Expect (p. 1) / Corporate Finance | Equity-Linked and Other
Financial Products (p. 5) / Derivatives | Enforceability of Counterparty Arrangements Post-
Lehman (p. 7) / Hedge Funds | Key Issues (p. 9) / Investment Management | Impact of Jones v.
Harris Associates on Fund Advisory Fees (p. 13) / Leveraged Finance | Recent Developments
in Financing Commitments (p. 15) / Private Equity Funds | Key Issues (p. 17) / Structured
Finance | New Securitization Accounting Rules and Their Implications for Bank Capital and
Legal Isolation (p. 21) / Structured Finance | Lessons for the CMBS Market and the Securitization
World in the General Growth Properties Bankruptcy (p. 25) / Structured Finance | Lehman
Challenges the Subordination of Derivatives Payments in Structured Products (p. 27)
“We believe there are likely to be more
IPOs and public/Rule 144A offerings
to reduce exposures of private equity
sponsors and banks (especially in
troubled credits).”