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ACIC PRIVATE NOTES
“Spring” into the March 2022 edition of the ACIC Private Notes! In this edition, you’ll find:
The annual ACIC Committee Reports, compiled by Sarah Olson (Thrivent);
Recent case law summaries from New England, prepared by Kevin Braun (Morgan Lewis); and
Recent case law summaries from the Southern Region, prepared by Jeff Dutson (King & Spalding).
ACIC Spring Investment Forum Reminder
As a reminder, we look forward to seeing you all in person or virtually at the 2022 ACIC Spring Investment Forum on April 7th and 8th! You can find details about registration here.
ACIC Committee Reports
Curious about what each of the ACIC Committees does? Interested in getting involved? Click here for an overview of the purpose, goals, and current initiatives of each of the College’s Committees, and to find out who to contact to learn more.
Recent Case Law Summaries
Updates from New England
In Precision Computer Servs., Inc. v. Newtown Sav. Bank, No. AANCV186029468S, 2021 WL 5370456(Conn. Super. Ct. Oct. 26, 2021), the company sued the bank for liability under Article 4A of the UCC for initiating a fraudulent wire transfer to a Hungarian company for $67,560 for advisory and legal services and moved for summary judgment. The Connecticut Superior Court granted the company’s motion for summary judgment, determining that the bank had not sufficiently shifted the risk of loss because it violated its own security procedures and failed to comply in good faith existing security protocols. Click here to learn more.
In In re NESV Ice, LLC, No. 21-11226-CJP, 2022 WL 586136 (Bankr. D. Mass. Feb. 25, 2022), the U.S. Bankruptcy Court for the District of Massachusetts denied the lender’s motion to dismiss the debtor companies’ claims that the payment of default interest was unenforceable as a penalty or usurious due to the parties’ fundamental disagreement as to the facts, but held that the debtor companies must amend their complaint to plead more specific facts to avoid future dismissal. In addition, the Bankruptcy Court held that the debtor companies’ fraudulent transfer claims will be dismissed unless the complaint is amended to plead more specific facts as to the adequacy of non-monetary consideration. Finally, the Bankruptcy Court held that, under the test for equitable subordination, the debtor companies had stated a claim for plausible relief by alleging that the lender’s aggressive actions to advance its acquisition of the debtor companies’ properties harmed the debtor companies and their other creditors. Click hereto learn more.
Updates from the Southern Region
In Underwood v. Colony Bank, No. A21A1639, 2022 WL 414579 (Ga. Ct. App. Feb 10, 2022), after a borrower indebted to a lender bank failed to make payments under a forbearance agreement and the bank threatened to file a previously-executed deed in lieu of foreclosure on the borrower’s home, the borrower commenced an action against the bank for breach of contract, among other claims. The trial court entered summary judgment in favor of the bank. The Court of Appeals of Georgia reversed the order on the breach of contract claim, finding that the bank’s acceptance of late, partial payments created issues of fact as to whether the forbearance agreement had been modified. Click here to learn more.
In Ledford v. Keen, 9 F.4th 335 (5th Cir. 2021), the Fifth Circuit Court of Appeals made its best Eerie “guess” to determine that, under Texas law, evidence of the defendant non-profit corporation’s historical undercapitalization, without evidence of further abuse, was insufficient to support a claim of piercing the corporate veil and, thus, there was no basis to toll the statute of limitations on a negligence suit against the directors of the non-profit corporation. Click here to learn more.
In Reynolds American Inc. v. Third Motion Equities Master Fund Ltd., 866 S.E. 2d 869 (Sup. Ct. NC 2021), in the first public-company appraisal case tried in North Carolina, the Supreme Court of North Carolina affirmed the North Carolina Business Court’s decision that the fair value of the dissenting shareholders’ shares was less than or equal to the deal price. The Supreme Court found that the Business Court’s decision to credit the deal price was informed by valuation analysis and rejected the shareholders’ argument that the Business Court failed to use “customary and current valuation concepts and techniques.” Click here to learn more.
In 623 Partners, LLC v. Bowers, 2021 WL 4129413 (Ala. 2021), the Alabama Supreme Court, as a matter of first impression, held that, after ten years had elapsed since the entry of a judgment, the judgment was presumed satisfied and there was no longer a debt to remedy. Accordingly, the judgment creditor could not maintain a claim to collect on the debt under the Alabama Uniform Fraudulent Transfer Act. Click here to learn more.
In DSLRPros, Inc. v. Lalo, -- So.3d --, 2021 WL 5348890 (Nov. 17, 2021), the District Court of Appeal of Florida affirmed the trial court’s holding that the individual owners of two borrower companies were personally liable for the full amount of the companies’ $750,000 loan from the lender. The District Court of Appeal found that the terms of the pledge agreement signed by the individual owners were unambiguous in requiring the individuals to personally pay any unsatisfied amounts due under the loan agreement. The District Court of Appeal also found that the imposition of statutory interest – which exceeded the contract rate – was appropriate, as the loan agreement stated that the loan obligations would bear interest at the contract rate “from time to time”, and therefore the loan agreement did not provide for a specific post-maturity or default rate of interest. Click here to learn more.
In SPI Holdco, LLC v. Mookerji, 864 S.E. 2d 633 (Ct. App. Ga. 2021), the Court of Appeals of Georgia affirmed the trial court’s decision that, during Mookerji’s time as CEO of a software company which he had sold to Tower Arch, Mookerji was entitled to $5,400,000 in incentive payments for acquisitions that occurred during the term of his employment contract and a Tesla of his choosing, because the plain language of the employment agreement provided for incentive payments upon the earnings from the holdco’s sale and did not exclude future sales occurring after the commencement of the employment agreement. Click here to learn more.