I Shall [Not] Be Released: Wellspring, Director Releases, and the Duty of Loyalty in Restructuring Negotiations
As we here at Ropes & Gray look back on 2021 and ahead into 2022, we call your attention to the lessons of Friedman v. Wellspring Capital Mgmt., LLC (In re SportCo Holdings, Inc.), Case No. 20-50554, 2021 WL 4823513 (Bankr. D. Del. Oct. 14, 2021) (Stickles, J.) (“Wellspring”).
Wellspring is a cautionary tale for the fiduciaries of a distressed or potentially distressed corporation—particularly with respect to negotiations around release and/or indemnification provisions for those same fiduciaries.
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Ropes & Gray LLP by Ryan Preston Dahl, Matthew L. McGinnis, and Benjamin M. Rhode. Published January 12, 2022.