In an article in American Bankruptcy Journal that he co-authored with Mark Stingley from Bryan Cave, Spencer Fane Partner Eric Johnson updates readers on the potential effects of a recent ruling by the U. S. Bankruptcy Court for the District of Delaware in the Intervention Energy Holdings LLC matter.
In its decision, the court rejected the “golden share” method of restricting bankruptcy filings solely on the grounds that such a method violates federal public policy. In the article, Eric and Mark discuss the history of the golden share concept, which gives lenders veto power over any proposed bankruptcy filing. They explain that whether a business entity has authority to act, however, is a question of state law, and a bankruptcy court must look to state law to determine whether a business has the proper authorization to file a bankruptcy petition.
The authors conclude that courts should therefore first look to state law in matters such as this, and that courts should be wary of relying on or expanding the Intervention Energy decision.
You can read the entire article here.