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China’s New M&A Regulations

I. Introduction

The first piece
in this series (A Warning to Foreign Companies Entering "Sensitive" U.S. Markets, in the September 6th, 2006 edition of this publication) discussed the attempts of foreign companies to enter "sensitive" areas of the US
economy, focusing on how the US government derailed the purchase of US
companies by foreign entities. [1] This
piece will discuss the Chinese government's new regulations covering
M&A transactions involving foreign investors purchases of Chinese
companies will affect the M&A market and possible motivations behind the new legislation.   

II. Analysis

On Aug. 8, 2006, the People's Republic of China ("PRC")'s  Ministry
of
Foreign Commerce ("MOC") issued new regulations ("Revised Provisions")
on M&A transactions in China. [2] These new regulations would
simultaneously ease and impede foreign acquisitions by allowing all
stock purchases, but also requiring government approval of most M&A
transactions involving offshore entities. [3] The Revised Provisions
went into effect

… Read the rest
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Bank of America Settles Money Laundering Suit for $7.5 Million

The Bank of America recently settled a money laundering suit brought
by Manhattan District Attorney, Robert M. Morgenthau for $7.5 million,
$6 million in penalties and $1.5 million in costs, ending an almost
three year investigation conducted in coordination with foreign
authorities. [1]

District
Attorney Morgenthau said that a series of transfers, totaling more than
$3 billion, prompted the investigation because they possessed some of
the ear-marks of terrorist financing, much of which comes from South
America. [2] The transfers originated in offshore shell companies owned
by illegal Brazilian money services and were routed through the Bank of
America account of a Uruguayan money remitter. [3] Although officials
do not know the identity of many of the recipients, District Attorney
Morgenthau believes that some of the transferred funds went to Mideast
terrorist organizations. [4]

Under the terms of the settlement, Bank of America admitted that it
failed to adequately asses … Read the rest

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Merck owes the IRS big bucks – for taking advantage of the international tax market?

I. Introduction

There are two things in life that are certain: death and taxes. 
Corporations have successfully cheated the former by achieving
perpetual life.  And, from their births, it seems like corporations
have also been doing their darndest to avoid the latter.  Offshore
affiliates have become a popular corporate technique for avoiding
income tax.[1]  Recently, Merck has been investigated for putting its
own unique spin on the traditional offshore affiliate.

II. Analysis

In 1993, Merck in conjunction with a British bank entered into a
Bermuda partnership whose assets were substantially comprised of the
soon-to-be-valuable patents behind cholesterol-lowering medications
Zocor and Mevacor.[2]  In creatinig this partnership, Merck engaged in
a practice called "inversion:" a method of reorganization wherein a
domestic corporation reorganizes itself to become a subsidiary of a
foreign parent entity, thereby rendering any profits generated by the
foreign business operations outside of the reach of the federal income
tax.[3] 

… Read the rest
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Real Estate Auctions: Is a Bidder Legally Bound?

Real estate auctions exist in many forms and are becoming increasing popular over the internet. Ebay alone boasts that 55,000 property have already been sold through eBay Real Estate.  [1]  There are significant benefits to using the internet to purchase property, since one can shop for real estate around the globe, pick a suitable property, and bid online from the comfort of one's home.  [2]  Traditional real estate auctions still exist, most commonly as government auction of seized property [3] or as bank auctions of foreclosed property. With the current estimate that one in three properties will be sold by auction by the year 2010, [4] one might wonder which, if any, of these auctions legally bind the bidder to purchase the property.

Traditional real estate auctions for government property or bank foreclosures occur on the steps of the home at a specified time with the potential buyers present at

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A Salty Flavor to Your (Formerly) Land-Based Contracts: Norfolk Southern v. Kirby Two Years Later

In 2004 the Supreme Court of the United States handed down a decision that changed the jurisdictional requirements of adjudicating a contract in admiralty.  [1]  This was a major development in an area of the law that is remarkably resistant to change because of the nature of shipping evolves little compared to other technology.  These changes should have had a larger effect in legal circles, because now certain “mixed contracts” that fell in the grey area between admiralty and non-admiralty law were considered to be within admiralty jurisdiction entirely.  [2]  Now certain contracts for the carriage of goods that arrange for transportation over both land and water in a single contract can be adjudicated in certain instances that were impossible before.  [3]  Currently, a shipping container undergoing some catastrophic event in Nevada could be litigated in admiralty as long as the majority of its journey was made on navigable waterways

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Going “Stealth”: Executive Compensation in Chapter 11 After Dana

A rose by any other name may still smell as sweet, but execs at Dana
Corp. recently discovered that calling executive compensation by
another name did not pass the smell test in court. S.D.N.Y. Bankruptcy
Judge Burton Lifland recently denied Dana's proposed executive
compensation package as contrary to the provisions of the Bankruptcy
Code. [1]  Nearly one year after BAPCPA, has the Dana case finally ushered in a new approach to evaluating executive compensation plans, as envisioned by Congress?

Executive Compensation After BAPCPA

The Bankruptcy Abuse Prevention and Consumer Protection Act, enacted
last October, added some severe restrictions on the ability of Chapter
11 debtors to adopt so-called "pay to stay" executive compensation
plans. [2]

New Code section 503(c) establishes the guidelines for insider
retention, bonus, and severance plans, also known as KERPS. [3] Under
the new evidentiary standards,the Code bars bonuses to corporate
insiders as an inducement to stay … Read the rest

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Ford-GM Merger/Alliance Talks: Bigger is Not Necessarily Better

Automotive News recently reported that General Motors Corp. and Ford Motor Co. have discussed a possible merger or alliance.[1]  Neither company will comment on the talks [2], leading some followers to believe the reports are mere "speculation" and reflect "[n]ostalgia for the glory days of the American automobile industry."[3]  Nostalgia and speculation aside, the merger/alliance rumors are enough to incite the interests of industry followers and American car buyers as to the possible benefits of such a relationship.

A merger would combine "two of the world's most recognized brands."[4]  The combined company would account for "an astounding 41 percent of the U.S. auto market."[5]  An alliance could force innovative thought and encourage novel business decisions, as it seems to some that "[t]he old school way of doing things at Ford and GM isn't working."[6]  If nothing else, a merger would combine name recognition and product lines.  However, the merger process

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The Online Movie Rental Battle

I. Introduction

Should
the concept of movie rentals via the internet be protected by a
patent?  Netflix, Inc. seems to think so.  That is what prompted them
to sue Blockbuster, Inc. for infringing their patents by starting up
Blockbuster Online.  But Blockbuster thinks Netflix has invalid patents
and that the monopolization of the online movie rental business would
not be fair.  These are the issues that recently came up in Netflix,
Inc. v. Blockbuster, Inc.  [1].

II. Analysis

Netflix is suing Blockbuster for infringing their patents by
starting Blockbuster Online which also allows consumers to rent movies
through the internet, similar to what Netflix offers.  [2].  Netflix has two patents that describe methods for renting items for ordering digital video discs (DVDs) via the internet.  [3].  Blockbuster feels there is nothing original about renting movies to customers through the internet.  [4]. 
To obtain a patent, the patentee

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Confirmed test results: A new uphill battle for American cyclist Floyd Landis

I. Introduction

It goes by
many different headlines: doping, steroids, performance enhancing drugs
(PEDs).  It is an issue that rears its head in competitive sports time
and time again.  A controversy has been building for years and is
currently unfolding: allegations of a champion American cyclist having
used PEDs during the Tour de France.  But the American cyclist that the
French accused for so long is retired, and his former teammate now sits
opposed to the pointing finger of the cycling world.  This time the
cycling world has some evidence to support its claims.  [1] 
This article analyzes the charges that the current Tour de France
champion cyclist Floyd Landis faces and the course of appealing those
charges. 

II. The alleged doping is the type that enhances the athlete's recovery and energy levels

Floyd Landis has tested positive for synthetic testosterone. 
Synthetic testosterone use conjures thoughts of oversized men

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Sports Stadiums: Do Franchises Really Need Public Financing to Build Their New Stadiums

I. Introduction

Many people have spent a summer night or a Sunday afternoon at the ballpark or stadium watching their favorite teams.  These stadiums are an integral part of a professional sports franchises operations.  In recent years there has been a surge in new stadiums being built by teams as they take advantage of the willingness of cities to provide public financing.  Since 2000 there have been 17 new stadiums built for National Football League and Major League Baseball teams. [1].  In addition, several teams are in discussions for the building of new stadiums in the next few years. [2].

II. Analysis

Of those 17 new stadiums only one, SBC Park in San Francisco, was built entirely with private funding. [3]. Sports teams have on average have been able to get 70% of the costs of building a new stadium financed through public funding. [4]. This generally allows sports franchises

… Read the rest