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Defining A Shareholder's Bankruptcy Veto Power

Law360 (June 7, 2018, 1:19 PM EDT) -- On May 22, 2018, the U.S. Court of Appeals for the Fifth Circuit upheld a bankruptcy court’s ruling that a shareholder could exercise the right granted to it in the debtor’s organizational documents to block a bankruptcy filing even though the shareholder was also a creditor of the debtor.[1] The holding is important because the fact that an investor also holds a claim against the company will not, in and of itself, invalidate a bankruptcy consent provision found in a debtor’s organizational documents.

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