Author Archives: Guest Author(s)

Career Panel Tomorrow: “From the Courtroom to the Boardroom: Using Your Law Degree in the Business World”

Please join the Corporate Law Society, Real Estate Law Society and the Career Services Office on Tuesday, October 13, 2009, when three accomplished executives will address the topic: “From the Courtroom to the Boardroom: Using Your Law Degree in the Business World.”

Howard Tullman is the immediate past President of Kendall College, which he recently sold to Laureate Education. Now, Mr. Tullman serves as CEO of Flashpoint, digital media arts college. After practicing law for ten years,  Mr. Tullman changed routes and has founded or served as CEO or Board Chairman of nine companies and as a director and/or adviser to many other early-stage companies. In addition to teaching at Northwestern’s Kellogg Graduate School of Management, Mr. Tullman is the General Managing Partner of Chicago’s High Tech Investors, LLC, Director of the Cobalt Group and Passage Events, both located in Seattle. Mr. Tullman graduated, with honors, from both Northwestern University and Northwestern University School of Law.

Victoria Noonan is the Managing Director of Leasing for Tishman Speyer Properties, responsible for supervising and coordinating the company’s leasing efforts for the Chicago portfolio. Tishman Speyer is one of the leading owners, developers and managers of first-class real estate in the world. In Chicago, Ms. Noonan manages leasing efforts for eleven high-rise buildings in the area, including the Civic Opera Building. Ms. Noonan graduated from DePaul University in 1980 and received her J.D. from Chicago-Kent in 1984.

After practicing as a commercial real estate attorney at Katten Muchin Rosenman LLP and, thereafter, at Greenberg Taurig LLP, Dustin Cahan left his practice to become the Chief Operating Officer of Evaporcool Solutions, LLC, a “green” technology venture. Mr. Cahan, who is 29, oversees the development and manufacturing of a sophisticated cooling solution, which reduces energy and maintenance costs of air conditioning equipment. Mr. Cahan obtained his B.A. in economics from Northwestern University, and thereafter his J.D. from Northwestern University School of Law.

The event will convene at 12:00 p.m. in Room 270. Pizza and refreshments will be served.

Helio Castroneves Acquitted of Tax Evasion

helio_castronevesHelio Castroneves was acquitted Friday of all five tax evasion charges stemming from his alleged formation of foreign shell corporations to hide certain racing revenue.

ESPN reported that the case really ended up coming down to testimony from Castroneves’s father regarding the original formation of the foreign corporations. He claimed his son never had any control or ownership interest in the corporations and that Helio had no control over their initial formation. The jury obviously believed Helio and his father regarding the tax evasion but was still hung on one conspiracy charge. The Government likely will not pursue the conspiracy issue any further though. Helio could have faced up to six years in prison had he been convicted.

Both Helio’s sister, who is his business manager, and Alan Miller, Helio’s attorney responsible for his financial planning and structuring, were acquitted of their tax evasion charges as well.

Assessing TARP Strategy Report from COP

100_dollar_billElizabeth Warren, the chair of the Congressional Oversight Panel (created to oversee the expenditure of TARP funds, and to “review the current state of financial markets and the regulatory system”) was on The Daily Show with John Stewart this week to talk about TARP and the recent report on TARP strategy released by the Panel.

On April 7, six months after the passage of the Emergency Economic Stability Act, the Congressional Oversight Panel released a report titled “Assessing TARP Strategy.” The report, relying on historical responses to past banking crises, reviews methods for evaluating the programs created to assuage the current financial crisis. The Panel identified 4 elements that were critical to historical banking crises programming: Transparency, Assertiveness, Accountability, and Clarity.

The first half of Stewart’s interview with Warren illustrated that some of these elements don’t seem to be a part of the current programs. Warren stumbled her way through questions about how much money has been spent, and what exactly that investment was worth – rather, what it wasn’t worth. She did manage, though, to point out that this general uncertainty was due in large part to Paulson’s “don’t ask, don’t tell,” policy of distribution in relation to the first $350 billion of expenditures. Warren said the Panel is calling for more transparency, more accountability, and more clarity; they want a better articulation of policy and an explanation of what exactly is going on in the current expenditure programs.

Warren also took the opportunity to advocate a need for smart regulation to bring about economic stability and prosperity. She noted that before the great depression our economic history followed a boom and bust cycle every 10-15 years. After the implementation of regulations like the FDIC, SEC, and Glass-Steagall, though, we had a long period with no financial crisis. But those regulations began to unravel, according to Warren, and we ended up where we are today. (Bonus: check out this post on Geithner’s regulatory plan).

So check out the the interview (part 1, part 2), and the report and let me know what you think…

Credit Default Swaps Making Corporate Reorganization Impossible?

The Financial Times reports that credit default swaps may be undermining companies’ attempts to reorganize in bankruptcy. When a debtor company attempts to reorganize, the success of the reorganization often depends on creditors agreeing to reduce, extend the repayment period of, or otherwise modify the outstanding debt owed to them by the reorganizing debtor. A creditor would be willing to do this because the modified debt would lead to a larger repayment than the amount the creditor would receive in the event of a liquidation of the debtor company.

Thus, corporate reorganizations are made possible because lenders have an interest in keeping their debtors from being liquidated. However, when lenders take out credit-default swaps on debtor companies as insurance on their loans, the lenders stands to receive full or partial payment of the debt from the CDS dealer if the debtor defaults. This payout from CDS increases the total return to the lender in a debtor’s liquidation; thus, lenders holding CDS-backed debt are less willing to accept reduced and/or extended payments from debtors, and corporate reorganizations become more difficult, if not impossible, to structure.

Should the bankruptcy law be modified to somehow fix this severing of a lender’s and debtor’s interests? Could a bankruptcy court revive a CDS-backed lender’s incentive to compromise by modifying CDS contracts or by increasing the benefits of a reorganization? Or could the CDS dealer who inherits the lender’s anti-liquidation interest somehow be brought into the equation?

News Roundup

  • “Accountability Lies with All of Us” – Tom Wilson, CEO of Allstate, wrote this Op-Ed in yesterday’s NY Times, advocating that “we must all accept responsibility for our current situation, and work together to broaden the scope of federal regulation to protect both consumers and financial markets.”
  • Hot on the heels of Northwestern’s offer to graduating students to extend their University-sponsored health care coverage, UCLA has announced that it is establishing a new LLM program for the 2009-2010 school year – the “Transition to Practice” program, which will “focus on enhancing the practical skills and development of the new lawyer.” Ironically, we have heard this idea somewhere before … for further debate on whether an apprenticeship should simply be part of the J.D. curriculum, you can click herehere, or here.

NBA Might Need New Collective Bargaining Agreement

nba_logo1mThe Sports Business Journal reported this week that despite a collective bargaining agreement between NBA players and owners that runs through the end of the 2010-2011 season, a new agreement will likely have to be agreed upon.

Because of the poor economic climate and the expected low business numbers league-wide, a new agreement seems forthcoming. But, collective bargaining agreements, like most normal union labor contracts, rarely are easy to negotiate or agree upon for that matter. On the contrary, they are often difficult to hammer out, and in this economic climate there is little chance players, looking for as many incentives as possible, and owners, looking to save as much as possible, will see eye to eye on anything.

Investors Push Towards Madoff Bankruptcy

Five of Bernard Madoff’s investors filed a petition to force Madoff into an involuntary Chapter 7 bankruptcy on Monday. The petition comes after U.S. District Judge Louis Stanton of the Southern District Court of New York ruled on Friday that bankruptcy would be the best way for investors to reclaim their lost assets and lifted a stay obtained by the Securities and Exchange Commission (SEC) to block any litigation against Madoff. Although the SEC and Department of Justice fought the lifting of the stay claiming that an involuntary bankruptcy would only delay recovery and add to administrative costs, Judge Stanton stated that those concerns were “speculative” and “outweighed by the benefits to Mr. Madoff’s victims of a bankruptcy trustee’s orderly and equitable administration of his individual estate.” The number of investors included as creditors under the petition will undoubtedly increase as five is merely the minimum number of creditors required to file an involuntary bankruptcy under the U.S. Bankruptcy Code.