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The news just broke that the Clear Channel acquisition litigation – both in Texas and New York – is on the road to being settled, with the parties having penned a new set of agreements tonight, providing for the acquisition of Clear Channel by Thomas H. Lee Partners and Bain Capital, with the Clear Channel shareholders getting $36 per share (or the option for equity in the post-acquisition entity).

The Clear Channel press release provides that:

The banks, the private equity investors, Clear Channel, certain shareholders, and Bank of New York (serving as escrow agent) have entered into an Escrow Agreement pursuant to which the private equity investors and the banks [a bank syndicate consisting of Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, Royal Bank of Scotland and Wachovia] have agreed to fund into escrow the total amount of their respective equity and debt obligations, in a combination of cash and/or letters of credit, within ten and seven business days, respectively.  Certain shareholders also have agreed to deposit into escrow securities of Clear Channel that these parties have agreed to exchange for Class A common stock of CC Media Holdings.  Following deposit of funds and other property into escrow, each party to the merger related litigation pending in New York and Texas will file all papers necessary to terminate the litigation, with prejudice.

Thus ends the long drama of the seller chasing the buyer chasing the lender.  It appears we will walk away not having learned how a court in New York would have dealt with the specific performance aspect of forcing lenders to finance a private equity dea.  This assumes, of course, that the Clear Channel revised acquisition ultimately closes by the third quarter of 2008, as tonight’s press release promises.  Stay tuned.

I have just been told by someone who attended the 10:45 a.m. hearing this morning in Justice Helen Freedman’s courtroom in New York state court that the Clear Channel litigation brought by private equity buyers against their lenders – the litigation that the media kept saying over the past two days was *about* to settle – is going to trial at 2 p.m. today.  Ha!  What happened to the settlement?  Will this litigation settle in the next few days or are the lenders going to roll the dice and gut through a trial in New York state court?

First, the backstory:  In May of last year, private equity buyers signed a merger agreement to acquire Clear Channel Communications, Inc.  The private equity buyers (entities affiliated with Bain Capital Partners and Thomas H. Lee Partners) were to borrow about $22 billion to fund this deal, and their lenders included Wachovia, RBS, Citigroup, and Deutsche Bank.  The lenders and the buyers executed a commitment letter, addressed to Clear Channel, which spelled out the lenders’ basic commitment to finance the deal for the private equity buyers.

When the credit markets tightened this past summer, we saw a range of lenders trying to get out of their obligations to finance various deals.  The lenders in the Clear Channel acquisition were no different, and in the fall or winter of 2007, the lenders tried both to renegotiate the terms of their obligation to finance the private equity buyers’ Clear Channel purchase and to get out of the deal entirely.  Apparently the lenders tried to push the private equity buyers to accept some unacceptable terms, such that, on March 26, 2008, the private equity buyers filed suit in New York state court against the lenders for various claims including breach of contract and fraud.  Basically the buyers maintained that the lenders had committed “anticipatory breach” of their obligation to lend the money to finance the Clear Channel purchase.  The lenders made a motion for summary judgment in this case.

On the same day, in Texas state court, Clear Channel filed suit against the banks for tortious interference of contract, maintaining that the lenders were interfering with the merger agreement between Clear Channel and the buyers by refusing (or threatening to refuse) to finance the deal.

On May 7, 2008, Justice Helen Freedman in the New York State Supreme Court, denied in part the defendant lenders’ motion for summary judgment, such that trial became inevitable.  While Justice Freedman dismissed the private equity buyers’ claims of fraud, Justice Freedman left open the issue of anticipatory breach of contract.  Moreover, Justice Freedman left open the issue of specific performance – the buyers maintained that they were entitled to specific performance under the lending agreement, such that the banks should be forced to finance the $22 billion acquisition.  Justice Freedman, in her May 7 opinion, said that she could not decide the issue of whether specific performance was available based on the limited pleadings before her, but she said the issue could be revisited after trial, if the lenders were found to have breached their lending obligations.  So anticipatory breach and specific performance as a remedy were left as unanswered questions for resolution after trial.

This past weekend, word on the Street was that the lenders, buyers, and Clear Channel were trying to negotiate a new deal whereby the private equity buyers would acquire Clear Channel at a reduced price, to settle the litigation, consummate the acquisition and avoid trial.  Indeed, terms of the “settlement” had been produced by the media.

Yet, at a 10:45 a.m. hearing today in court in New York, Justice Freedman said trial in this case will begin today at 2 p.m., indicating that the widely-touted settlement has not been forged.

What does this mean?  Will there be a settlement inked at 1:59 p.m. today?  Or did the media miss the boat on this one?  Or will there be a settlement in a few days, but before the end of the trial?

From the standpoint of the lenders, there is not a whole lot to lose other than the cost of litigation from going to trial.  According to the lenders, if they are forced to do this deal, they will lose a huge amount of money.  So, if they settle this matter in the way the media has reported – by financing a deal at a slightly cheaper price ($36 per Clear Channel share versus $39 per share) – it seems that the lenders will lose at least a significant portion of the money they stood to lose by financing the deal they originally agreed to support.  Settlement – of the sort the WSJ indicated was looming – was not a great option for the lenders.  However, if the lenders go to trial, one of three things can happen:

(a) The lenders can win, with Freedman finding that there was no anticipatory breach, such that the banks can continue to negotiate aggressively with the buyers over the terms of the financing generally sketched out in the commitment letter from May 2007 and the banks might even be able to drive the buyers away,

(b) The lenders can lose, with Freedman finding that there was anticipatory breach, and the lenders are liable for damages, which might be tied to the increased price of financing the buyers will be forced to seek from other lenders, or

( c) The lenders can lose, with Freedman finding that there was anticipatory breach *and* the buyers are entitled to specific performance, such that the lenders will have to finance the original deal that is only incrementally worse than the settlement the Street was reporting to have been reached this weekend.

From the lenders’ standpoint, options “a” and “b” are better than the settlement that was rumored over the past couple of days.  Since two out of three possible outcomes at trial are better than the settlement that was reported in the media today and yesterday, and the third outcome is only marginally worse, I would not be surprised if this case does not settle and goes straight through trial. Moreover, even if option “c” above is marginally worse than what the lenders were reported to have achieved in settlement over the weekend, option “c” above will give the lenders the intangible benefit of certainty.  Meaning, the lenders will walk away from this particular deal burned, but they will walk away knowing that, from now on, they can insist on an iron-clad provision in any commitment letter making clear that specific performance is not even remotely an option.  Moreover, lenders in the future will be on good footing to insist on a letter from the target/seller wherein the target is forced to certify that it understands, prior to receiving a commitment letter, that its remedies against the lenders (if any) will not include specific performance.

It will be interesting to see how this plays out….

Edited at the end of the day on Tuesday: This just in – the parties *have* reached a deal in principle, though the deal has not yet been announced by anyone other than Reuters (e.g. no press releases from the companies that I have seen).

This just in: Microsoft withdrew its most recent bid for Yahoo and announced it will not be making a hostile move for Yahoo. This comes on the heels of the announcement a mere day ago that Yahoo and Microsoft were sitting down to try to hammer out a friendly deal.  Fickle, that Microsoft is!

Allow me to answer questions folks might ask in the aftermath:

1.  Question:  What does this retreat by Microsoft say about the economy and the M&A market?

Answer:  Nothing.  Nada.  Microsoft wanted to buy Yahoo for cheap.  Yahoo wanted no part of that.  Over the past 20 months, while Yahoo’s stock has been weak, it has traded on-and-off in the $30-ish range.  Microsoft’s final $33 per share bid was nothing to write home about.  If Microsoft was making a credible bid and they thought Yahoo was a good long-term strategic acquisition, we would have seen bid prices moving up further than they have over the past three months.

2.  Question:  What is going to happen on Monday to Yahoo’s stock price?

Answer:  Yahoo’s stock price is going to get pummeled by arbs exiting their short-term investment.  The drop in Yahoo’s stock price will mean nothing of substance.  I promise.  So, while the media is going to get all excited on Monday about the drop in price, and the 5 p.m. news on Monday is going to talk about Yahoo being the day’s biggest loser, ignore the chatter.  Or buy Yahoo stock while it is cheap.

3.  Question:  Is the Yahoo board going to get sued?  Wasn’t this a good deal for Yahoo and the Yahoo board just gave it away?

Answer:  No and no.  Well, “yes” and no.  Yahoo’s board has already gotten sued both by shareholders who thought the Yahoo board should have taken the Microsoft offer and, oddly, from shareholders who thought Yahoo was favoring Microsoft.  Either way, I think those suits are non-starters.  Again, Microsoft was not offering a huge premium for Yahoo.  If I were on the Yahoo board, I would have said “no,” too.

4.  Question:  Is Microsoft just bluffing?  Will they come back with a better bid?

Answer:  I hope not.  I am not convinced that Microsoft yet has a really solid reason for why they need to buy Yahoo, other than thinking they could get Yahoo for cheap.  Now that Microsoft realizes it cannot buy Yahoo for cheap, I doubt they will be circling back around in the short term.  The fact that Microsoft announced tonight that it did not intend to make a hostile bid speaks further to the dim chances they will circle back around in the short term.

To that end, Microsoft should thank the Yahoo board that the Yahoo board stopped Microsoft from making a purchase that does not make a whole lot of sense.  Am I the only person who remembers the AOL-Time-Warner deal from just under a decade ago that is NOW being unwound?  That deal NEVER made sense, and, LOOK, ten years later, it is being unwound.

Note to Microsoft CEO Steve Ballmer:  Send Yahoo CEO Jerry Yang a nice fruit basket on Monday, to thank him from saving Microsoft from its urge to merge.

The DC Madam killed herself today, about a week after being found guilty by a jury on prostitution-related charges of money-laundering (among other things).

Among her alleged clients are Louisiana Senator David Vitter, former U.S. Deputy Secretary of State Randall Tobias, and Harlan K. Ullman, a senior associate with the Center for Strategic and International Studies, who developed the “shock and awe” doctrine.

I titled this post with a “Dammit,” something I am not inclined to do normally in this academic setting, because I am just disgusted and disheartened at how this has played out.  Anyone who has paid attention to how women versus men have been treated in the context of prostitution could have seen this train coming down the tracks. Women who are exposed as having been involved in prostitution scandals often kill themselves.  Men tend to waltz away, unscathed in the long term.  I realize these are gross generalizations for which I have no empirical substantiation, but I am thinking about Brandy Somethingorother, from about a year ago.  Without going back and looking the story up, I think Brandy was a professor (or used to be) who was also a prostitute.  When she was publicly revealed as a prostitute, and when it seemed that she was going to be in huge legal trouble, she killed herself.  I do not recall that any of her male clients, nor any of the DC Madam’s male clients, killed themselves.  Just the DC Madam and this Brandy Somethingorother killed themselves.  Why is it that the women are scorned and shamed and kill themselves but the same thing does not happen on the male side?

I am one of three daughters, raised in an all-girl household (save my long-suffering father).  All three of us Nowicki girls have graduate degrees.  We were raised completely unaware of the notion that being a girl ever mattered in the bigger-picture sense.  (It mattered in terms of whether I needed to lift the toilet seat and whether I was likely to grow to a size to be able to compete on the football field with any chance of success, but it did not matter – or so I thought – in terms of justice and fairness in life.)  We were raised with the belief that everyone – women, men – are judged equally on the basis of their achievements and missteps, and gender is irrelevant.

But, yet, the DC Madam was left dangling by her neck in some shed in Florida, while Vitter, Tobias, and Ullman are out there, happily employed, likely soon to put their affiliation with the blissfully deceased (likely their view) DC Madam far, far behind them.  *That* is what prompts me to title this post “Dammit.”  We all could have seen this coming.  *That* is why this post is titled “Dammit.”

It strikes me as ironic that I just learned today that corporate and securities law professor Jill Fisch was hired by UPenn, such that there is now one fewer top top law school with basically no women among the corporate/securities law faculty.  Score one for the women.  Congratulations Professor Fisch.  Tough to juxtapose that, however, with “RIP Deborah Jean Palfrey.”  I guess today is a wash in terms of equality for women.  Dammit.

My condolences to Ms. Palfrey’s mother.  Regardless of the legality or illegality of Palfrey’s actions, it should not have ended this way.

The Financial Times reported yesterday that an embarrassed GE CEO Jeffrey Immelt had to tell GE shareholders that the 10% growth in earnings for 2008 that he had promised analysts in March was not going to be possible.  GE missed its quarterly forecasts and halved its 2008 forecast to 5% growth in earnings (as opposed to the 10% growth promised).  The Financial Times article mentioned a “sense of shock among the investor community” and noted that one analyst, after Immelt’s downward revision, “compared GE’s promise of long-term improvements to the Chicago Cubs, the US baseball club that hasn’t won a championship in 100 years.”

Upon reading this FT article this morning, I thought “oh, dear God.  Do we remember none of the lessons learned just a few years ago about the perils of over-promising results to analysts?”  Why, exactly, does Immelt feel the need to promise a 5% increase in earnings for 2008 when (a) we are in a credit crunch, (b) GE is likely going to have to do more write-downs this year, (c) the cost of inputs is increasing, if not skyrocketing, (d) inflation is high, and (e) the economy is weak (among other things)?  Why is Immelt promising *growth* in earnings when the reality is that just achieving positive earnings for 2008 is likely to be good thing?  Why is Immelt putting pressure on himself and his officers to produce growth?

Memo to Immelt:  Earnings do not have to grow each year.  In some markets, in some economies, in some industries, in some “downturns,” simply having earnings – any positive earnings – is a good thing.  Matter of fact, sometimes earnings should NOT be growing each year.   Were I a GE investor, I would not want Immelt promising 5% growth for 2008 because I would figure that the only way he can promise to hit that number in such an uncertain market and gloomy economy is by commiting to fudge year-end 2008 numbers if needed.  And, as we learned several years ago, fudging year-end numbers tends to catch up with companies, and, when it does catch up, the valuation fall-out is worse than if the forthright disclosure (e.g. “2008 earnings might be flat”) had been made initially. Am I the only one who remembers back to the not-so-distant past, when unrealistic promises made to analysts by corporate officers led to companies cooking their books at year end to make the numbers?  As I recall, things did not always work out so well in those cases.  Enron, anyone?

Surely it is enough for a company in some years to produce returns that are merely equal to the prior year’s, as opposed to “besting” the prior year’s earnings. Didn’t we learn this lesson several years ago?  Investors are supposed to invest for the long term and diversify.According to the FT, one of the reasons why GE missed its quarterly numbers recently is because GE was unable to close “$900m-worth of real estate asset sales,” which the FT referred to as “a traditional way for GE to boost quarterly returns.”  If I were a GE investor, I would be peeved to read this.  I would rather GE just do the real estate deals when they make the most sense, when the market is most favorable for the deals at issue, regardless of when the gain/loss woulbe be booked.  If that means GE misses its numbers sometiemes due to the lack of a crystal ball regarding the best time to sell the assets, and I take a short-term valuation hit (on paper) as a GE investor, so be it.   It doesn’t create long-term value for shareholders if GE rushes through real-estate transactions just to make the numbers if the timing is not sensible for the transactions and waiting a little bit of time would garner value for shareholders.(The FT reports that “GE slashed its 2008 earnings forecast from $2.42 per share to $2.20-$2.30 – still an increase of as much as 5 per cent from last year.”  Slashed?  Slashed?  Are you KIDDING me?  “Slashed” implies something negative.  Earnings of $2.20-$2.30 per share for a year that is not likely to shape up particularly well  would be good.)

I am blogging today from the Tulane Corporate Law Institute, here in New Orleans, at the stunning Westin Hotel. I am set to appear on the Private Equity panel tomorrow, where I will talk about, among other things, the implications of 2007’s string of failed private equity deals.  In preparation for this conference, I drafted a memo on the top few lessons to learn from the 2007 private equity deals. Among the lessons learned, I observed, was that “merger agreements mean what they mean.” What I was referring to was the string of deals that got into trouble in 2007 because the buyers tried to evade the deals, arguing that there was a material adverse change in the condition of the target, and the sellers tried to press for specific performance, in the shadow of a merger agreement that was clear on neither the definition of material adverse change nor when specific performance was justified.

Deal lawyers have long kept the not-so-secret secret that we really don’t know what most material adverse change provisions mean, in the abstract. If pressed, we might admit that, indeed, they are often painfully ambiguous. We cannot necessarily opine, again in the abstract, whether they would cover a given set of facts. And we are ok with that because we like the idea that, in court, we can argue whatever way will help our case (that there was or was not a material adverse change).

Setting aside the “we,” and speaking no longer as a deal lawyer but as a corporate governance aficionado, I have to say that I have long thought that target boards of directors should not be ok with signing off on material agreements – merger or otherwise – that are not clear (at least on material points). Or boards should not be content to sign off until they understand why the ambiguity is acceptable. The reality is that I suspect that little has changed since Smith v. Van Gorkom, where the Trans Union board never even *saw* the merger agreement, much less read it and debated “material adverse change” provisions. And that troubles me.

Today’s panels here at the Deals Conference confirmed my concerns. Three people made interesting comments: First, a high-profile investment banker made clear that the bankers just don’t *know* what events fall within “material adverse change,” such that the deal could fall apart. Meaning, the investment bankers don’t really know how the merger agreement language reads, as a legal matter. (This is not surprising in light of the URI case opinion making clear that UBS (bankers for URI) had no idea they were basically selling an option on URI (as opposed to signing a deal to buy URI).) My view is that, since bankers are the ones STRUCTURING financial aspects of the deal and opining on the totality of the deal, including pricing of the risk that the deal will not consummate, they need to be very clear on what can implode the deal and how the risks of non-consummation due to “material adverse change” play out. Second, a high-profile deal lawyer on the same panel both (a) basically confirmed that we are still in a deal world where the “material adverse change’ language is admittedly looser than it could be and (b) confirmed that deals would still get signed even if the target board insisted on tighter materiality language. Third, Vice Chancellor Strine opined that …. “[i]f I were going to obsess about something, it would be Keira Knightley.” I seem to have been distracted by that comment, because, though Strine later *did* say something about “material adverse change,” I failed to write it down. I do believe Strine said something to the effect that boards should understand, prior to signing, what a material adverse change that would get the buyer out of the deal would include.

So where do we end up? We end up right where we have always been. It is not ideal to have merger agreements with ambiguous “material adverse change” language. But everyone – drafting lawyers, investment bankers, boards- seems to let it slip by. It is only a matter of time before a target board gets successfully sued in a fiduciary duty lawsuit for failing to act “in good faith” by signing a *sale* document without reading it and realizing it is ambiguous on an important topic. Then it is only a matter of time before the board spins around and sues both (a) their lawyers and (b) their bankers for failing to explain the deal-impacting aspects of the deal terms struck (such as “material adverse change,” specific performance conditions, and reverse termination fee outs). Mark my words. You heard it here first.

Today, Treasury Secretary Henry Paulson is set to present some comments about the Treasury’s Blueprint for Financial Regulatory Reform, released on Saturday.  (A summary of the proposal is here.)

The summary of the proposal report provides:  “In this report, Treasury presents a series of “short-term” and “intermediate-term” recommendations that could immediately improve and reform the U.S. regulatory structure. The short-term recommendations focus on taking action now to improve regulatory coordination and oversight in the wake of recent events in the credit and mortgage markets. The intermediate recommendations focus on eliminating some of the duplication of the U.S. regulatory system, but more importantly try to modernize the regulatory structure applicable to certain sectors in the financial services industry (banking, insurance, securities, and futures) within the current framework.”

I have a few comments on the proposals:

1.  The report contemplates consolidation of market regulators for the securities markets and the commodities markets.  This is a difficult issue.  Intuitively, I like the notion of consolidating regulation, as the regulatory authority dealing with commodities (the CFTC) and regulators of the general securities markets (SEC) both regulate the markets for securities.  That said, commodities regulation is (a) incrementally more sophisticated than the regulation of the generic securities markets due to the increased complexity in products, their evolution, and their likely economic/market impact and (b) different in sort than the regulation of plain vanilla securities.  Moreover, my impression – based on my experience working at the SEC and my experience as a corporate/securities/business scholar – is that the CFTC does a bit of a better job than the SEC in avoiding political pressure.  (Think about it – while we can easily recall a series of SEC Chairmen resigning under pressure, can we easily recall a series of CFTC Chairmen resigning under pressure?)  Is it sensible to combine agencies and lose that market niche insulation?

2.  The motivation for Treasury’s proposals strikes me as questionable.  The report summary says:  “Market conditions today provide a pertinent backdrop for this report’s release, reinforcing the direct relationship between strong consumer protection and market stability on the one hand and capital markets competitiveness on the other and highlighting the need for examining the U.S. regulatory structure.”  Indeed, the argument was made in connection with last spring’s Paulson report that the US capital markets are becoming less competitive, in part due to mis-regulation (and overregulation).

But the argument that the US capital markets are becoming less competitive continues to be the subject of robust academic debate.  (For example, Howell Jackson, Jack Coffe, Kate Litvak, and Don Langevoort, all very credible scholars, expressed differing views on the issue at the AALS annual meeting this past year.)  I, for one, do not believe that the US capital markets are becoming less competitive.  Instead, I believe that the overseas markets are becoming *more* competitive.  That is not a bad thing, nor is it reason to overhaul US market regulation.  In reality, maybe the increasing competitiveness of overseas capital markets counsels in favor of our holding the status quo, to see how things shake out with the fundamentals that make the overseas markets increasingly competitive in the short term.

To that end, the report summary says “[g]lobalization of the capital markets is a significant development. Foreign economies are maturing into market-based economies, contributing to global economic growth and stability and providing a deep and liquid source of capital outside the United States. Unlike the United States, these markets often benefit from recently created or newly developing regulatory structures, more adaptive to the complexity and increasing pace of innovation.”  Until we know how these more newly developed regulatory structures fare in the long term, is seems unwise to jump to action to keep up with them.    Moreover, the summary of Saturday’s report indicates that its authors looked closely at the UK, Australia, and Netherlands financial markets regulatory regimes in designing the proposals in the report.  Basing reform of the US capital markets on regulation in the UK, Australia, and the Netherlands, however, does not strike me as sound.  If we are entertaining notions of wholesale reform, why not instead pin down what the conceptual optimal model would look like, as opposed to mining for inspiration from other regulators?  That said, the report purports to so do, to a degree, as discussed below in point three.

3.  The report touts a new “objectives based regulatory approach.”  This approach, however, while radically different from the current US capital markets regulatory structure in terms of how it is implemented, is nothing new in terms of goals.  (Indeed, the summary says the new structure is motivated in part by “the convergence of financial services providers and financial products has increased over the past decade.  Financial intermediaries and trading platforms are converging.   Financial products may have insurance, banking, securities, and futures components.”  But wasn’t this dealt with in the Gramm- Leach-Bliley Act?  Why now do we need to revisit what appears to have been sensible reform less than a decade ago?)

The report summary says “[l]argely incompatible with these market developments is the current system of functional regulation, which maintains separate regulatory agencies across segregated functional lines of financial services, such as banking, insurance, securities, and futures,” and the report instead argues for an objectives based regulatory scheme, based on the objectives of “[m]arket stability regulation…, [p] rudential financial regulation…, and [b]usiness conduct regulation.”  But our current functional regulatory scheme operates with a focus on these exact objectives.  A consolidation of power into one regulatory authority for each objective seems to do nothing other than allow for (a) tunnel vision by a given objective’s regulator and (b) decreased input in terms of how to regulate to the goal of meeting these objectives.  With respect to point “b,” I believe that it is useful to have the leaders at the SEC, the CFTC, and the Federal Reserve all making calls to each other, giving input to the President and Congress, and agitating for ways to secure better regulation.  Yes, there is tension and a bit of repetitive regulation, but it seems to me that that is healthy when dealing with a matter as important as the United States capital markets.

4.  I have not worked through exactly how Saturday’s report proposes, if at all, to restructure the actual Board of Governors of the Federal Reserve System.  I will note, however, that I am generally leery of restructuring the Federal Reserve, both in terms of authority and operation.  Part of what makes the Federal Rserve work is the fact that the Governors serve for 14 year terms, allowing for insulation from political pressure (to a degree) and a link between immediate decision-making and longer-term implications.  (Contrariwise, the SEC Commissioners are usually long gone before the fall-out from their decisions becomes manifest.)  The Federal Reserve System has worked well for almost 100 years.  Does it really make sense to tamper with it?

5.  To paraphrase, “regulate in haste and repent in leisure.”  I am never thrilled to see a massive proposal for overhaul and reform on the heels some major business or economic event.  Did the aftermath of the Sarbanes-Oxley Act (which is an act that I support, by the way) teach us nothing?

David Zaring and Gordon Smith have some interesting comments over on the ‘Glom, as does Larry Ribstein on his blog.

Tulane’s annual “Corporate Law Institute” is coming up!  The conference – widely viewed as the must-attend deal conference of the year is April 3 and 4 (only two weeks away).

The roster for this year’s conference reads like a who’s who of the deal world, with a range of Delaware jurists, investment bankers, top lawyers, and Wall Street media on the two days worth of panels.

The conference, which is organized by practitioners (not Tulane folks), was started twenty years ago by former Delaware jurist and Tulane Law alum former Justice Andrew Moore.  (As you corporate law wonks know, Justice Moore wrote several of the big takeover opinions from Delaware in the mid-1980s.  Many in the corporate law world were scandalized when Justice Moore was not reappointed when his term expired, but, based on the takeover opinions he penned, those of us who are cynical about just how political and pro-defendant Delaware tries to be were not surprised.)  Justice Moore will be making an appearance on the 20th year retrospective panel at the Tulane conference.

The conference should be stupendous, and I hope those of you who are reading this and will be attending the conference will make it your business to introduce yourselves to me.  I will be on the private equity panel on Friday, but I will be attending both days of the conference in full.

The specifics of the conference are here.

The news has just broken that New York State Governor Eliot Spitzer intends to resign on Monday.  This means that Lieutenant Governor, David Paterson, a relative unknown, will become the governor of New York State. More importantly, this means Joe Bruno, New York State Senate Majority Leader, will be tapped to “perform all the duties of lieutenant governor,” as per Article IV, Section 6 of the New York State Constitution.  (Many thanks to Marc Hodak for that most helpful citation (and correction to my earlier posting).)Â

And here’s the rub – Bruno is Republican; Paterson and Spitzer are Democrats.  Moreover, Bruno was been very obviously and very painfully at odds with Spitzer.  Bruno’s ascension, then, is interesting for three reasons:  (1) It splits the Governor’s office power (to the extent that Bruno will be able to exercise some power as acting lieutenant governor, whatever that means) between Dem. and Republican, (2) it forces Bruno and Paterson to work together despite the Bruno-Spitzer animosity, and (3) it relieves the pressure on the very narrowly Republican New York State Senate.  That last point is the most curious one for me, an Albany, NY, native.Â

Bruno, the majority leader in the Senate, has been trying to hold on to the very narrow Republican margin in the Senate.  Paterson, the lieutenant governor, has had the authority to act as a tie-breaker for Senate ties, which put pressure on Bruno’s one person Republican margin in the Senate.  Even just one Republican defector on a vote could force a tie that would give the Dems an extra vote (by Paterson).  That’s a fair amount of Dem. power and Republican tension… that now appears to go away if Paterson is no longer the lieutenant governor.  Right?  (I cannot find the provision of the NYS Constitution or Senate Rules that addresses this point.  I am now sort of waiting to see if Marc Hodak concurs….  (See his helpful comments in the “comments” section.))

Also, in doing research, I see that this is the third time in recent history that our NYS Lieutenant Governor has had to step in for an exiting governor.  Hmmm.  Maybe the back door way to power, then, in New York State, is by becoming Lieutenant Governor and keeping your fingers crossed that your boss will drop the ball.

According to the Associated Press, New York State Governor Eliot Spitzer is reported to be or have been a client of a “high-end prostitution ring called Emperors Club VIP.”  This morning, Governor Spitzer publicly apologized to his family and the public, “but did not not elaborate on a bombshell report that he has been involved in a prostitution ring.”

The story is still breaking, but it forces me to wonder if Governor Spitzer will be prosecuted for patronizing a prostitute, if it turns out that is what he did.  As we all know, both parties involved in prostitution are breaking the law.

More to the point, as the DC Madam, Deborah Jeane Palfrey, is prosecuted in federal court for running a prostitution ring, it will be interesting to see how things develop with Governor Spitzer.  One of the DC Madam’s big gripes is that, though the government has the names and identities of plenty of her customers and *ahem* female contractors, only she – Deborah Jeane Palfrey – is being prosecuted.

Back when I was in law school at Columbia, I did research for the late Professor Curt Berger, who was a property expert.  Professor Berger once asked me to research how many women versus how many men were arrested for prostitution (in New York state, as I recall).  By far, the women outnumbered the men.  Lovely….  Will the Eliot Spitzer situation, when juxtaposed with the DC Madam prosecution, prove the point further?

Stay tuned.