liquidity

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Dividend recapitalization is a tool that enables private equity firms to extract liquidity from portfolio companies without the need to complete a sale or IPO. In the following guest post, the authors explore this funding technique, which is not without its risks and exposures and which may raise important insurance issues as well. This article is co-authored by Sarah Abrams, Head of Professional Liability Claims, Bowhead Specialty Underwriters, Inc., Elan Kandel, Member, Bailey Cavalieri LLC and James Talbert, Associate, Bailey Cavalieri LLC. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Dividend Recaps: Potential Risks for Private Equity Firms and Their Insurers

Earlier this year three large U.S. banks failed in a sequence of events that has been called The Banking Crisis of 2023. While federal regulators acted decisively and forcefully to prevent the bank failures from triggering a contagion event, the underlying problems that caused the three banks to fail continued to trouble many other U.S. lending institutions. Among the banks that faced continued challenges and continuing questions is the California-based bank Pac West, which in July 2023 announced that as a way to try to deal with its woes it was being acquired by the Bank of California. Now, a plaintiff shareholder has filed a securities class action lawsuit against Pac West and certain of its directors and officers alleging misrepresentations in connection with the events surrounding the other banks’ failures ad leading up to the July merger. The new lawsuit is the latest example of the ways in which ongoing issues in the banking sector are leading to securities class action lawsuit filings. A copy of the new complaint can be found here.Continue Reading Regional Bank Hit with Banking Crisis-Related Securities Suit

Earlier this year, challenges arising from rising interest rates, as well as concerns surrounding liquidity and other issues, led to three of the largest banking failures in U.S. history. The three that failed were not the only banks facing challenges in the rising interest rate environment, and while there have been no further failures since May, questions from the turbulence earlier this year remain for many banks. Now, in a sign that these kinds of challenges and questions can lead to securities litigation even in the absence of bank failure, a plaintiff shareholder has filed a securities class action lawsuit against KeyCorp (the bank holding company of KeyBank) after questions about the bank’s liquidity and interest rate income in a rising interest rate environment caused a drop in the company’s share price. A copy of the August 4, 2023, complaint filed against Key can be found here.Continue Reading Liquidity and Interest Income Concerns Draw Securities Suit Against Bank

Corporate directors and managers have broad responsibilities to oversee their company’s operations. Among the most important items for these executives to monitor are the company’s operational and capital cash flows. In following guest post, H. Stephen Grace, Jr., Suzanne H. Gilbert, S. Lawrence Prendergast, and Joseph P. Montelone, the importance of corporate executives’ oversight of cash flows cannot be overstated – it is, the authors suggest, “the most critical indicator of a company’s ability to survive.” Steve Grace is President and Founder of H.S. Grace & Company, Inc.,; Suzanne Gilbert is a veteran corporate executive with over 30 years of experience with the Interpublic Group of Companies (IPG); Larry Prendergast is Chairman of the Turrell Fund and serves on the advisory boards of several investment funds, including JPMorgan; and Joe Monteleone is a Partner at the Weber Gallagher Simpson Stapleton Fires & Newby LLP law firm. A version of this article previously was published on ABA’s Business Law Today site (here). I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article. Continue Reading Guest Post: Monitoring Cash Flows: The Board, the CLO, and the CFO