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Bankruptcy Fire Sales, Lynn M. Lopucki, Joseph W. Doherty

Michigan Law Review

For more than two decades, scholars working from an economic perspective have criticized the bankruptcy reorganization process and sought to replace it with market mechanisms. In 2002, Professors Douglas G. Baird and Robert K. Rasmussen asserted in The End of Bankruptcy that improvements in the market for large public companies had rendered reorganization obsolete. Going concern value could be captured through sale. This Article reports the results of an empirical study comparing the recoveries in bankruptcy sales of large public companies in the period 2000 through 2004 with the recoveries in bankruptcy reorganizations during the same period. Controlling for company …

Brand New Deal: The Branding Effect Of Corporate Deal Structures, Victor Fleischer

Michigan Law Review

Consider the unusual legal structures of the following four deals: When Google went public in 2004, it used an Internet auction to sell its stock to shareholders. When Ben & Jerry's went public in 1984, it sold its stock only to Vermont residents. Steve Jobs's contract with Apple entitles him to an annual cash salary of exactly one dollar. Stanley Works, a Connecticut toolmaker, considered reincorporating in Bermuda to reduce its tax liability. Under public pressure, it changed its mind and remains legally incorporated in Connecticut. What do these deals have in common? In each case, the legal infrastructure of …

Labor Law Successorship: A Corporate Law Approach, Edward B. Rock, Michael L. Wachter

Michigan Law Review

In this article, we take an approach fundamentally different from that of the labor law commentators. We start from a broader perspective than is common: successorship is as important an issue for corporate law as it is for labor law. Given that the two principal inputs to the firm are labor and capital, it would be surprising if the laws for labor law successorship were completely different from the laws for corporate law successorship. To the extent that differences exist, those differences should hinge upon differences between the employees' and the creditors' relationships with the firm.

European Merger Control: Legal And Economic Analyses On Multinational Enterprises, Volume 1, Michigan Law Review

Michigan Law Review

A Review of European Merger Control: Legal and Economic Analyses on Multinational Enterprises, Volume 1 edited by Klaus Hopt

Survival Of Rights Of Action After Corporate Merger, Michigan Law Review

Michigan Law Review

Once a corporation ceases to exist, most courts permit neither primary nor derivative suits to be brought in its name. If a merger precipitates that corporate demise, courts usually hold that standing to sue, like other assets of the "merged" corporation, passes to the surviving corporation. This Note ponders the merit of that rule of passage.

Section I categorizes the cases defining the rule of passage. Some courts have steadfastly adhered to the rule and denied standing to the merged corporation's shareholders. Other courts, fearing that the rule would preclude meritorious actions, have created exceptions allowing these shareholders to sue …

United States V. Falstaff Brewing Corporation: Potential Competition Re-Examined, Michigan Law Review

Michigan Law Review

This Note will examine and criticize the perceived potential competition doctrine suggested by the Court. Then, it will discuss the questions raised in the concurrences concerning the use of subjective evidence and the role of incipient competitive effects. Finally, an alternative approach that focuses on the acquisition of or the possibility of acquiring small, "toehold" firms will be proposed.

A Reappraisal Of Appraisal Statutes, Norman D. Lattin

Michigan Law Review

Two recent cases, under two of the most carefully framed corporation statutes, have raised again the question of what to do with the shareholder who dissents from fundamental change in his corporation. The appraisal statutes were devised to meet this problem by giving the shareholder, in the limited number of fundamental changes stated in the statute, the right to demand the fair, cash or market value of his share and retire from the company. The statutes of two states have given him this right as almost the exclusive means of protecting his interest in the company if he is dissatisfied …

Taxation - Federal Income Tax - Distinction Between Sale And Tax Exempt Reorganization Under Section 112, Henry J. Merry

Michigan Law Review

The recent Supreme Court decision in Le Tulle v. Scofield, disapproving the views of four out of five circuit courts of appeals, appears to add a new and more specific requirement to the already complex law on the subject of statutory reorganization under the Revenue Act of 1928 -- that the consideration received by the transferor corporation include some stock of the transferee corporation. In the subject case, the Gulf Coast Irrigation Company transferred substantially all its assets to the Gulf Coast Water Company in exchange for $50,000 in cash and $750,000 in mortgage bonds, four-fifths of which matured …

Corporations - Power Of Majority Stockholders To Reorganize By Transfer Of Assets To New Corporation In Exchange For Stock, Kenneth K. Luce

Michigan Law Review

A private corporation is solvent and prosperous but is nearing the time when its charter will expire. The directors call a stockholders' meeting at which the majority of the stockholders vote: first, to form a new corporation and, second, to transfer all the assets of the old corporation to the new corporation in consideration for the entire capital stock of the new corporation and the assumption by the new corporation of all liabilities of the old corporation. The plan further provides that the old corporation is then to be dissolved, and the stock of the new corporation is to be …