Question
In 2018, C makes a secured loan to L Limited Partnership (L). The loan agreement provides, inter alia, that: (1) GP, Inc. shall be the
In 2018, C makes a secured loan to L Limited Partnership (L). The loan agreement provides, inter alia, that:
(1) GP, Inc. shall be the sole general partner of L;
(2) GP, Inc. shall at all times have an independent director," acceptable to C;
(3) L cannot file a bankruptcy petition without the affirmative vote of all of the directors of GP, Inc.; and
(4) L cannot incur more than $16,750 of debt other than its debt to C without the affirmative vote of all of the directors of GP, Inc.
In 2020, L is in default and C commences foreclosure procedures. Can L file a bankruptcy petition? Does it matter whether the independent director required under the loan agreement has resigned or is otherwise is no longer in office? See In re Intervention Energy Holdings, LLC, 553B.R. 258 (Bankr. D. Del. 2016); Bruce A. Markell, Fool's Gold?: Opting Out of Bankruptcy By Manipulating State Entity Law, 36 No. 8 BANKRUPTCY LAW LETTER NL 1 (Aug. 2016).
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