Digital Commons Network^™

Law And The Rise Of The Firm , Henry Hansmann, Reiner Kraakman, Richard Squire

Faculty Scholarship

Organizational law empowers firms to hold assets and enter contracts as entities that are legally distinct from their owners and managers. Legal scholars and economists have commented extensively on one form of this partitioning between firms and owners: namely, the rule of limited liability that insulates firm owners from business debts. But a less-noticed form of legal partitioning, which we call "entity shielding," is both economically and historically more significant than limited liability. While limited liability shields owners' personal assets from a firm's creditors, entity shielding protects firm assets from the owners' personal creditors (and from creditors of other business …

The Confused U.S. Framework For Foreign-Bank Insolvency: An Open Research Agenda, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

How Law Affects Lending, Rainer F.H. Haselmann, Katharina Pistor, Vikrant Vig

Faculty Scholarship

The paper explores how legal change affects lending behavior of banks in twelve transition economies of Central and Eastern Europe. In contrast to previous studies, we use bank level rather than aggregate data, which allows us to control for country level heterogeneity and analyze the effect of legal change on different types of lenders. Using a differences-in-differences methodology to analyze the within country variation of changes in creditor rights protection, we find that the credit supplied by banks increases subsequent to legal change. Further, we show that collateral law matters more for credit market development than bankruptcy law. We also …

Financial Contracts And The New Bankruptcy Code: Insulating Markets From Bankrupt Debtors And Bankruptcy Judges, Edward R. Morrison, Joerg Riegel

Faculty Scholarship

The reforms of 2005 yield important but subtle changes in the Bankruptcy Code's treatment of financial contracts. They might appear only to eliminate longstanding uncertainty surrounding the protections available to financial contract counterparties, especially counterparties to repurchase transactions and other derivative contracts. But the ambit of the reforms is much broader. The expanded definitions – especially the definition of "swap agreement" – are now so broad that nearly every derivative contract is subject to the Code's protection. Instead of protecting particular counterparties to particular transactions, the Code now protects any counterparty to any derivative contract. Entire markets have been insulated …

An Empirical Investigation Of Liquidation Choices Of Failed High Tech Firms, Ronald J. Mann

Faculty Scholarship

Perhaps it is merely a reflection of my interests, but to my mind, empirical research requires a certain risk-preferent boldness. I like projects that explore how and why particular businesses make important decisions. After I identify a topic, I typically try to gather as much qualitative and quantitative information about it as I can, with the expectation that when I have learned a great deal about the topic something interesting will emerge that relates in some important way to an ongoing academic debate. Those projects usually do not begin with a specific hypothesis to prove or disprove-often either answer will …

Licensing Intellectual Property And Technology From The Financially-Troubled Or Startup Company: Prebankruptcy Strategies To Minimize The Risk In A Licensee's Intellectual Property And Technology Investment, Richard M. Cieri, Michelle M. Harner

Faculty Scholarship

No abstract provided.

Taking Future Claims Seriously: Future Claims And Successor Liability In Bankruptcy, Frederick Tung

Faculty Scholarship

Treatment of contingent tort liabilities when a business is sold presents a particular challenge for corporate and bankruptcy law. In this article, I focus on the precarious position of future tort claimants-those who may be harmed by a manufacturer's defective product after the manufacturer has sold its business and disappeared. By the time the future claimant's injury occurs, she may be left with no means of recovery. While the article focuses primarily on the bankruptcy sale context, a discussion of the nonbankruptcy context provides important background.

In the article, I make two claims. First, I address recent proposals suggesting that …

Protective Orders In The Bankruptcy Court: The Congressional Mandate Of Bankruptcy Code Section 107 And Its Constitutional Implications, Michelle M. Harner, William T. Bodoh

Faculty Scholarship

No abstract provided.

Confirmation And Claims Trading, Frederick Tung

Faculty Scholarship

The buying and selling of claims against companies in financial distress is not a new phenomenon. In times of financial distress, liquidity has always commanded a profit. However, the late 1980s and early 1990s saw the first significant trading of claims under Chapter 11 of the Bankruptcy Code, our relatively new and novel system of corporate reorganization. Traditionally scorned by the financial establishment, distress investment came into vogue with the "megabankruptcies" that followed in the wake of the leveraged buyout boom of the 1980s. With its prospects for huge profits, claims trading in Chapter 11 became a Wall Street staple. …

The Denial Of Future Tort Claims In In Re Piper Aircraft: Will The Court's Quick-Fix Solution Keep The Debtor Flying High Or Bring It Crashing Down?, Michelle M. Harner

Faculty Scholarship

No abstract provided.

Divorce Obligations And Bankruptcy Discharge: Rethinking The Support/Property Distinction, Jana B. Singer

Faculty Scholarship

The Bankruptcy Code currently divides divorce-related obligations into two categories: awards or agreements in the nature of support are non-dischargeable; obligations arising from property divisions can be discharged in the same manner as ordinary commercial debts. Because recent developments in family law have undermined the support/property distinction and because privately negotiated divorce agreements often fail to distinguish between payments intended to serve as support and those intended to distribute property, the Code's reliance on this classification often leads to confusion and hardship for divorce obligees. In addition, because of the rise of equitable distribution as the dominant method of allocating …

Ending The Marathon: It Is Time To Overrule “Northern Pipeline”, Erwin Chemerinsky

Faculty Scholarship

No abstract provided.

(Part 2) Chapter 7 Cases: Do Erisa And The Bankruptcy Code Conflict As To Whether A Debtor's Interest In Or Rights Under A Qualified Plan Can Be Used To Pay Claims, Donna Litman

Faculty Scholarship

No abstract provided.

Basics Of Business Reorganization In Bankruptcy, Steven L. Schwarcz

Faculty Scholarship

In this article, Steven Schwarcz offers an overview of Chapter 11 bankruptcy. In addition to beginning a Chapter 11 case, he also discusses administration of these cases and the plan of reorganization that a debtor must consider.

The 1935 Amendments Of The Railroad Bankruptcy Law, Leslie Craven, Warner Fuller

Faculty Scholarship

No abstract provided.