Vol 18 (2021) - Issue 2

Article preview

‘Golden Shares’ in US Bankruptcy Cases: Can the Right to Block a Bankruptcy Filing Be Enforced?

Synopsis
The COVID-19 pandemic will likely wreak havoc for years to come on US and global businesses and markets. In an effort to stave off the pandemic's effects on business operations, distressed companies have and will continue to require, among other things, liquidity infusions, amendments to existing credit agreements, or some combination thereof. Investors may seek various concessions and protections in return – including, for example, blocking rights with respect to the borrower's bankruptcy filing, or so-called 'Golden Shares'. Such blocking rights, however, are not necessarily enforceable, as recently confirmed by the United States Bankruptcy Court for the District of Delaware (the 'Delaware Bankruptcy Court') in In re Pace Industries, LLC.