Use of ‘Golden Share’ to Block Voluntary Bankruptcy Violates Federal Laws [Delaware Business Court Insider]

Mark Felger and Barry Klayman, both members of Cozen O’Connor’s Bankruptcy, Insolvency & Restructuring practice group, discuss a Delaware bankruptcy decision regarding a creditor’s attempted use of a “golden share” to block a voluntary bankruptcy filing in their Delaware Business Court Insider article, “Use of ‘Golden Share’ to Block Voluntary Bankruptcy Violates Federal Laws.” Mark and Barry write, “In In re Intervention Energy Holdings, U.S. Bankruptcy Judge Kevin J. Carey of the District of Delaware denied a creditor’s motion to dismiss the voluntary bankruptcy petition of a Delaware limited liability company filed in contravention of a provision in its operating agreement that required the unanimous consent of all members, including the creditor, to commence a bankruptcy case.” The decision is significant for lenders and borrowers using single member LLCs as an investment vehicle. Mark and Barry note that, “However uncertain its reach, the decision is best read to require some minimal duties to the LLC on the part of the blocking member if the blocking provision is going to be upheld as a matter of federal bankruptcy law.”

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Mark E. Felger

Co-Chair, Bankruptcy, Insolvency & Restructuring

(302) 295-2087

Barry M. Klayman


(302) 295-2035

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