Shift of Fiduciary Duty Upon Corporate Insolvency: Proper Scope of Directors\u27 Duty to Creditors

In the wake of the debt binge of the 1980s, the number of financially distressed corporations has increased dramatically.\u27 Because a struggling company rarely ceases operations overnight, directors still need to make investment and operational decisions concerning the best use of the company\u27s existing assets. This need remains whether the firm will regain profitability or will be liquidated. Financial distress also intensifies conflicts of interest between shareholders and creditors. Indeed, when these constituencies are unable to recover their investments in the corporation because of insufficient assets, both shareholders and creditors have incentives to maximize their individual returns regard- less of the possible adverse impact on other corporate participants and on the overall value of the firm. From the perspective of corporate governance, therefore, determining for whose interest directors should act during this highly volatile period will lead to different outcomes. Directors\u27 alliances with either shareholders or creditors influence decisions ranging from the day-to- day operation of the business to the future of the firm, such as whether to attempt an out-of-court debt restructuring or to seek protection under the Bankruptcy Reform Act of 1978.\u27 Most commentators thus far have focused on the relationship among the corporation\u27s managers, shareholders, and creditors during bankruptcy proceedings.5 Although corporate governance is an important issue when a firm is in bankruptcy, we also need to address the problem of these corporate actors\u27 opportunistic behavior as the company\u27s financial condition deteriorates before bankruptcy. This Article thus shifts the focus to an earlier point on the time line of corporate existence. If we can devise a set of rules that gives parties incentives to maximize the firm\u27s value even when the firm is in financial trouble, we can reduce the overall societal loss when the corporation eventually is pushed into either voluntary or involuntary bankruptcy. Part II of this Article examines the self-interested behavior of shareholders and creditors during pre-bankruptcy insolvency and argues that maximizing either constituency\u27s interest does not provide an accurate yardstick for value maximization. This point is illustrated by using several numerical examples to highlight the various sources of conflict between shareholders and creditors that emerge as the company\u27s financial health declines. Part III argues that directors should maximize the company\u27s value even when the company is in financial distress. Because maximizing the expected value of the firm can minimize losses associated with business failure and reduce the overall cost of capital, directors should take actions that maximize the company\u27s value even if such actions diverge from what shareholders or creditors would have chosen if left unconstrained. After arriving at this ideal standard of the directors\u27 duty, this Part examines plausible ways of implementing this standard. The analysis suggests that the optimal means of achieving the value maximization goal is to place the cost of contracting on creditors. The final Part of this Article examines the current law to (1) develop a theory that would explain the cases dealing with directors\u27 fiduciary duties as the company becomes insolvent, and (2) evaluate this common-law doctrine in light of the rule proposed in Part III. Under current law, several courts have held that although directors owe duties of care and loyalty to shareholders when a firm is solvent, these duties shift to creditors upon insolvency

Gauge coupling Unification and SO(10) in 5D

We analyze the gauge unification in minimal supersymmetric SO(10) grand unified theories in 5 dimensions. The single extra spatial dimension is compactified on the orbifold S^1/(Z_2 x Z_2') reducing the gauge group to that of Pati-Salam SU(4)_c x SU(2)_L x SU(2)_R. The Standard Model gauge group is achieved by the further brane-localized Higgs mechanism on one of the fixed points. There are two main different approaches developed in literature. Higgs mechanism can take place on the Pati Salam brane, or on the SO(10) preserving brane. We show, both analytically and numerically, that in the first case a natural and succesfull gauge coupling unification can be achieved, while the second case is highly disfavoured. For completeness, we consider either the case in which the brane breaking scale is near the cutoff scale or the case in which it is lower than the compactification scale.Comment: 18 Pages and 8 PostScript Figure

Defeating jamming with the power of silence: a game-theoretic analysis

The timing channel is a logical communication channel in which information is encoded in the timing between events. Recently, the use of the timing channel has been proposed as a countermeasure to reactive jamming attacks performed by an energy-constrained malicious node. In fact, whilst a jammer is able to disrupt the information contained in the attacked packets, timing information cannot be jammed and, therefore, timing channels can be exploited to deliver information to the receiver even on a jammed channel. Since the nodes under attack and the jammer have conflicting interests, their interactions can be modeled by means of game theory. Accordingly, in this paper a game-theoretic model of the interactions between nodes exploiting the timing channel to achieve resilience to jamming attacks and a jammer is derived and analyzed. More specifically, the Nash equilibrium is studied in the terms of existence, uniqueness, and convergence under best response dynamics. Furthermore, the case in which the communication nodes set their strategy and the jammer reacts accordingly is modeled and analyzed as a Stackelberg game, by considering both perfect and imperfect knowledge of the jammer's utility function. Extensive numerical results are presented, showing the impact of network parameters on the system performance.Comment: Anti-jamming, Timing Channel, Game-Theoretic Models, Nash Equilibriu

The Immunological Basis of Dry Eye Disease and Current Topical Treatment Options.

Homeostasis of the lacrimal functional unit is needed to ensure a well-regulated ocular immune response comprising innate and adaptive phases. When the ocular immune system is excessively stimulated and/or immunoregulatory mechanisms are disrupted, the balance between innate and adaptive phases is dysregulated and chronic ocular surface inflammation can result, leading to chronic dry eye disease (DED). According to the Tear Film and Ocular Surface Society Dry Eye Workshop II definition, DED is a multifactorial disorder of the ocular surface characterized by impairment and loss of tear homeostasis (hyperosmolarity), ocular discomfort or pain, and neurosensory abnormalities. Dysregulated ocular immune responses result in ocular surface damage, which is a further contributing factor to DED pathology. Several therapeutics are available to break the vicious circle of DED and prevent chronic disease and progression, including immunosuppressive agents (steroids) and immunomodulators (cyclosporine and lifitegrast). Given the chronic inflammatory nature of DED, each of these agents is commonly used in clinical practice. In this study, we review the immunopathology of DED and the molecular and cellular actions of current topical DED therapeutics to inform clinical decision making

Trellis decoding complexity of linear block codes

In this partially tutorial paper, we examine minimal trellis representations of linear block codes and analyze several measures of trellis complexity: maximum state and edge dimensions, total span length, and total vertices, edges and mergers. We obtain bounds on these complexities as extensions of well-known dimension/length profile (DLP) bounds. Codes meeting these bounds minimize all the complexity measures simultaneously; conversely, a code attaining the bound for total span length, vertices, or edges, must likewise attain it for all the others. We define a notion of “uniform” optimality that embraces different domains of optimization, such as different permutations of a code or different codes with the same parameters, and we give examples of uniformly optimal codes and permutations. We also give some conditions that identify certain cases when no code or permutation can meet the bounds. In addition to DLP-based bounds, we derive new inequalities relating one complexity measure to another, which can be used in conjunction with known bounds on one measure to imply bounds on the others. As an application, we infer new bounds on maximum state and edge complexity and on total vertices and edges from bounds on span lengths