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A B C D E F-H I J-L M N-O P Q-R S T U-Z Economic realities test An inquiry used by the IRS and courts to recharacterize debt as equity, when an unrelated third party would not have been willing to make a loan of similar size on similar terms to the corporation. Chapter 6.
Employee An agent whose principal controls or has the right to control the manner and means of the agent's performance of work. Chapter 4.
Enterprise liability A doctrine that allows a creditor to seek repayment not only from the debtor corporation but from related entities, as well. Chapter 8.
Enterprise rationalization Proposal that the multiple forms of entities be replaced by a unified system with one entity form complemented by a menu of options and choices. Chapter 20.
Entire fairness The standard of review of a directors' action in which the burden is on the defendants to demonstrate their utmost good faith and the most scrupulous inherent fairness of the bargain. It has two components: fair dealing and fair price. Chapter 13.
Equitable subordination A doctrine that protects creditors of a bankrupt corporation. The bankruptcy court may subordinate (i.e., give a lower preference to) debt that the court deems to resemble a shareholder's ownership interest more that a debt. Chapter 6 and Chapter 8.
Equity Ownership interest in a corporation. Chapter 6.
ESOP Employee stock ownership plan, which provides pension benefits to a corporation's employees through a trust that holds the corporation's stock. Also, a method of deterring hostile takeovers. Chapter 17.
Estoppel A theory under which a principal is liable for an agent's action, even if neither authorized nor apparently authorized, if third parties have changed their position in reliance upon their belief that the action was authorized and the principal caused (intentionally or carelessly) the belief, or if the principal, knowing of the belief, did nothing to notify the third parties of the facts. Chapter 4.
Event of default A significant or sustained violation of negative covenants by a debtor corporation. Chapter 6.
Exchange Act (or the '34 Act) One of two principal acts of Congress in the area of federal securities regulation. Chapter 6.
Exit strategy A motivation for changing control of a corporation that is triggered by some previously determined plan. Chapter 17.
Expected return The expected return of an investment is the sum of the value of each possible outcome multiplied by each outcome's likelihood. Chapter 3. |