Eric Lockridge

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Louisiana protects corporate directors and officers from liability to shareholders or others when they make decisions in good faith and reasonably believe that their decisions are in the best interest of the organization. This principal, called the “business judgment rule,” gives officers and directors the freedom to take risks and to make decisions without wondering…

A recent opinion from the United States Bankruptcy Court in Baton Rouge, Louisiana shows that even experienced lenders and developers may not always understand how Louisiana’s Private Works Act applies to their project, and how much leverage a properly filed notice of contract can provide to a general contractor.  Tuscany Reserve, LLC (“LLC”) was formed by sophisticated developers for the purpose of developing a new apartment complex in Baton Rouge. LLC obtained acquisition and construction financing from a bank (1st Bank), which properly recorded its mortgage on the project before work commenced. LLC hired “Contractor” to build the complex; Contractor recorded its notice of contract in the parish mortgage records.  As often happens, a dispute developed between LLC and Contractor regarding the work performed and lack of payment.  Contractor stopped work and filed a lien on the property under the Louisiana Private Works Act for $1.17 million.  Contractor eventually agreed to cancel its lien in exchange for a promissory note and guarantees from LLC’s principals and collateral provided by an LLC affiliate.  Once the lien was cancelled, 1st Bank funded two draw requests on the construction loan.  LLC needed more money for the project and turned to a new lender (2nd Bank) for additional financing.   2nd Bank secured its loan with a collateral mortgage on the immovable property for the project; there were no liens in the property records when 2nd Bank recorded its mortgage.  The relationship between LLC and Contractor soon soured, again, and Contractor filed two liens on the project, one for the original claim amount, plus interest, and another for $250,000.00.  Contractor sued LLC and its principals on the matured promissory note, and also sued LLC based on its rights under the recorded construction contract and the Louisiana Private Works Act. LLC eventually filed for chapter 11 bankruptcy in the Middle District of Louisiana.
Continue Reading Lenders and Developers Need to Understand How Louisiana’s Private Works Act Applies to Their Projects

Does a tenant’s failure to expressly assume a commercial lease within 120 days of filing bankruptcy give its landlord the right to immediate possession of the leased premises? Yes, according to several recent court decisions. The bankrupt tenant’s landlord is entitled to immediate possession of the leased premises, without going through the time and expense of moving to lift the automatic stay and pursuing an eviction in state court, or commencing an adversary proceeding in the bankruptcy court.
Continue Reading Landlord Entitled to Immediate Possession of Possession of Premises

The judge overseeing Chrysler LLC’s bankruptcy entered an order on June 1, 2009 approving Chrysler’s motion seeking permission to sell substantially all of its assets to a new company.  The procedure by which this sale was accomplished, and by which a similar sale in the GM bankruptcy will likely be accomplished, is known in the bankruptcy and finance worlds as a “363 Sale,” after the relevant provision of the U.S. Bankruptcy Code.

(For those well-versed in 363 Sales, see Stephen Sather’s thoughtful post about practical and ethical concerns with the Chrysler sale here. )Continue Reading 363 Sales of Assets in Bankruptcy – Chrysler and Beyond

In the current economy, corporate officers and directors face an increased risk of derivative suits and other litigation against them from frustrated shareholders and other stakeholders in a corporation. Should officers and directors also be concerned about claims brought against them by their company’s creditors? The answer may depend on what state’s law applies to the creditors’ claims.
Continue Reading “Zone of Insolvency” Claims Against Officers and Directors Still Alive (and Well?) Outside of Delaware

In today’s distressed retail market, the possibility of a tenant’s bankruptcy is a top concern for managers and owners of retail centers. Owners of commercial office buildings in many parts of the country are becoming increasingly concerned about tenant bankruptcies, too. Landlords need to know the options available when a tenant files for bankruptcy and should anticipate a tenant/debtor’s likely maneuvers in bankruptcy. This article provides a summary of relevant law and key strategic considerations to help landlords minimize losses and protect their interests when a tenant files bankruptcy.

Leases & “Executory Contracts”

Section 365 of the Bankruptcy Code allows a debtor (i.e., an entity that has filed for bankruptcy) to either assume or reject an executory contract or unexpired lease. This way, a debtor may decide to assume any valuable contracts and reject any burdensome ones. If a bankruptcy tenant decides to assume an unexpired lease, the lease will remain in effect through and after completion of a Chapter 11 reorganization. Assuming the lease does not mean the tenant gets to stay in the space free of charge. The tenant must cure any outstanding defaults and perform all pending obligations in the lease.Continue Reading Preparing for a Tenant’s Bankruptcy – the Landlord’s Perspective

Chapter 11 bankruptcies are on the rise, and many expect that trend to continue. In the third quarter of 2008 there were 70% more Chapter 11 filings than in the third quarter of 2007, according to Automated Access to Court Electronic Records, a company that tracks bankruptcy statistics.

Experts are predicting a record number of corporate bankruptcies – from large public companies to small local-only businesses – in 2009, and possibly beyond. With corporate bankruptcies becoming more common, businesses leaders across all industries are wondering: What exactly is a Chapter 11 bankruptcy, and how does it affect my business when a customer/vendor/competitor files for bankruptcy? This post and future posts on the Louisiana Law Blog are intended to help you understand the Chapter 11 process and answer some of your business bankruptcy questions.Continue Reading How Does Chapter 11 Affect My Business When a Customer, Competitor or Vendor Files for Bankruptcy?

Recent legislation significantly expands the scope of Louisiana’s work product privilege to include digital photographs, digital video and audio recordings, and other electronically stored information created by an attorney. Act 140 of the 2007 Regular Legislative Session (H.B. 203) (“the Act”) became effective earlier this month.  Among other provisions, the Act expands the scope of Louisiana’s work product privilege to include “electronically stored information.” (For a general discussion of the Act, click here.

Louisiana’s work product privilege is codified at Article 1424 of the Louisiana Code of Civil Procedure. Article 1424(A) previously protected from discovery a “writing obtained or prepared by the adverse party, his attorney, surety, indemnitor, or agent in anticipation of litigation. . .,” subject to certain conditions. The Louisiana Supreme Court interpreted that language to protect only a “writing,” and to provide no protection to other tangible things, in an attorney’s file, such as audio tapes, video tapes, or photographs. See, e.g., Landis v. Morreau, 2000-1157, p. 9 (La. 2/21/01), 779 So.2d 691, 697.Continue Reading Recent Legislative Change Expands Scope of Louisiana’s Work-Product Protection

Several provisions in Louisiana’s Code of Civil Procedure were amended in the last legislative session, and those changes are now in effect. One change made by the new law, Act 140 of the 2007 Regular Legislative Session (H.B. 203) (hereinafter, “Act 140”), is that the Code of Civil Procedure now specifically provides for the discovery of electronically stored information (hereinafter, “ESI”). Act 140 modifies Articles 1460-62 of the Code of Civil Procedure to explain how ESI should be requested and produced. The changes are intended to make Louisiana civil procedure more similar to federal procedure with regard to the discovery of ESI.   There are still many differences, however, between federal procedure and the changes made by Act 140. The Act did not copy and paste the recent federal rule changes regarding ESI (discussed here https://www.louisianalawblog.com/general-litigation/electronic-evidence-update-for-in-house-counsel/ into our state Code of Civil Procedure.
Continue Reading Recent Changes to Louisiana’s Code of Civil Procedure