USA Trends and Developments Contributed by: Ronald R. Rossi, Daniel J. Koevary, Jonathan L. Shapiro and Matthew B. Stein, Kasowitz LLP
of enforcement actions. Employers should narrowly tailor their agreements to address legitimate business interests, such as the disclosure of trade secrets, and consider alternatives (eg, non-disclosure agreements) that do not restrict employee mobility. In the period between when the federal non-compete ban was blocked and when it was rescinded, sev- eral states have enacted or are advancing new laws against non-competes. By way of example, in March 2025, Wyoming enacted a non-compete ban (effec- tive 1 July 2025), which includes certain exceptions such as non-competes in connection with the sale of a business and for executive and management person- nel. In addition, several states (eg, Arkansas, Colora- do, Maryland, and Pennsylvania) enacted or amended laws − with varying degrees of scope − that target non-competes with physicians and other healthcare professionals. Other states have non-compete bills currently pend- ing in their respective legislatures. These include New York’s Senate Bill S4641A (a revised version of the 2023 bill vetoed by Governor Kathy Hochul), which has passed the Senate and is currently pending before the Assembly. If enacted, the law would prohibit most post-employment non-compete agreements, with exceptions for “highly compensated” individuals earn- ing at least USD500,000 annually and in the sale-of- business contexts. In Illinois, pending House Bill 3213 would bar any new non-compete or non-solicitation agreements, unless certain specific conditions are met. Pennsylvania, after enacting its Fair Contracting for Health Care Practitioners Act, has seen legisla- tors introduce additional reforms in 2025, including a bill that would broaden the definition of covered “healthcare practitioner” to include speech-language pathologists and occupational therapists, as well as a separate bill aimed at prohibiting non-competes in broadcast employment agreements. Thus, even though the FTC has abandoned its nation- al ban, federal and state efforts to limit non-competes continue. Federal regulators have replaced sweeping rule-making with targeted enforcement, and states have continued to curtail non-competes through leg- islation. Employers that overuse non-competes risk being the subject of an enforcement action. While
a uniform national prohibition has not materialised, the combined efforts of federal enforcers and state legislatures signal a trend: broad non-competes that are not narrowly tailored remain vulnerable and states likely will continue introducing new legislation that employers must monitor closely. The continued evolution of ROI-enhancing transactions On 25 September 2025, the US District Court for the Southern District of Texas issued its opinion in In re ConvergeOne Holdings − holding that the exclu- sive rights offering embedded in the debtors’ plan of reorganisation violated Section 1123 (a)(4) of the Bankruptcy Code − and, consequently, reversed the bankruptcy court’s confirmation order. Specifically, the district court held that the debtors’ plan “offered a valuable and exclusive opportunity to backstop an equity rights offering” to the majority “without any exchange of value for the opportunity” and that the opportunity “resulted in significantly higher recover- ies to some class members for the same claims”. As a result, the court held that the selective right to participate in the rights offering failed to “provide the same treatment for each claim or interest of a par- ticular class”. The legal foundation underpinning the ConvergeOne decision – exemplified by the Supreme Court’s 1999 opinion in Bank of America National Trust & Savings Association v 203 N LaSalle St Partnership and the Fifth Circuit’s recent decision in In re Serta Simmons Bedding requiring both equality of opportunity and equality of treatment among similarly situated credi- tors – was not novel. Yet, the reversal of confirmation did mark a notable departure from decades of restruc- turing practice where courts have permitted debtors to provide additional consideration to majority groups whether in exchange for their vote in favour of a plan, financing, or plain old co-operation. To avoid the restrictions imposed by the Bankruptcy Code, debtors have routinely argued that the “addi- tional” consideration provided to select creditors is unrelated to the beneficiaries’ status as creditors and that such consideration is essential to the implemen- tation of the underlying transactions. Until recently, for
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