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Full-Text Articles in Law
A Capital Market, Corporate Law Approach To Creditor Conduct, Mark J. Roe, Frederico Cenzi Venezze
A Capital Market, Corporate Law Approach To Creditor Conduct, Mark J. Roe, Frederico Cenzi Venezze
Michigan Law Review
The problem of creditor conduct in a distressed firm—-for which policymakers ought to have the distressed firm’s economically sensible repositioning as a central goal—-has vexed courts for decades. Because courts have not come to coherent, stable doctrine to regulate creditor behavior and because they do not focus on building doctrinal structures that would facilitate the sensible repositioning of the distressed firm, social costs arise and those costs may be substantial. One can easily see why developing a good rule here has been hard to achieve: A rule that facilitates creditor intervention in the debtor’s operations beyond the creditor’s ordinary collection …
Securities Class Actions And Bankrupt Companies, James J. Park
Securities Class Actions And Bankrupt Companies, James J. Park
Michigan Law Review
Securities class actions are often criticized as wasteful strike suits that target temporary fluctuations in the stock prices of otherwise healthy companies. The securities class actions brought by investors of Enron and WorldCom, companies that fell into bankruptcy in the wake of fraud, resulted in the recovery of billions of dollars in permanent shareholder losses and provide a powerful counterexample to this critique. An issuer's bankruptcy may affect how judges and parties perceive securities class actions and their merits, yet little is known about the subset of cases where the company is bankrupt. This is the first extensive empirical study …
Bankruptcy Vérité, Lynn M. Lopucki, Joseph W. Doherty
Bankruptcy Vérité, Lynn M. Lopucki, Joseph W. Doherty
Michigan Law Review
In the empirical study we report in Bankruptcy Fire Sales, we compared the recoveries from the going-concern bankruptcy sales of twenty-five large, public companies with the recoveries from the bankruptcy reorganizations of thirty large, public companies. We found that, controlling for the asset size of the company and its presale or pre-reorganization earnings ("EBITDA"), reorganization recoveries were more than double sale recovenes. We are honored that Professor James J. White has chosen to comment on our study. White is an eloquent defender of the status quo, pulls no punches, and always has something interesting to say. Bankruptcy Noir is …
Bankruptcy Policymaking In An Imperfect World, Elizabeth Warren
Bankruptcy Policymaking In An Imperfect World, Elizabeth Warren
Michigan Law Review
This essay is about bankruptcy policy. It attempts to articulate a comprehensive statement about the various and competing goals that underlie the bankruptcy system. The essay offers both a positive observation, drawn from the Code and its operation, and a normative evaluation, designed to outline the difficult value judgments that comprise the bankruptcy system. It also serves warning: before commentators propose any sweeping changes or policymakers take seriously any suggestions to scrap the system, they must consider the impact of such proposals on a number of competing normative goals.
A Rule Unvanquished: The New Value Exception To The Absolute Priority Rule, Clifford S. Harris
A Rule Unvanquished: The New Value Exception To The Absolute Priority Rule, Clifford S. Harris
Michigan Law Review
This Note examines whether the new value exception remains part of the revised Bankruptcy Code. Part I discusses the background of the new value exception. Part II traces the development of the conflict concerning the survival of the new value exception subsequent to the adoption of the Code. It then discusses the Supreme Court's opinions in Mid/antic National Bank v. New Jersey Department of Environmental Protection and its progeny, which established the methodology for determining the impact of the revised Bankruptcy Code on preexisting bankruptcy law. Based on an analysis of the Midlantic doctrine, Part II concludes that Congress did …
The Labor-Bankruptcy Conflict: Rejection Of A Debtor's Collective Bargaining Agreement, Michigan Law Review
The Labor-Bankruptcy Conflict: Rejection Of A Debtor's Collective Bargaining Agreement, Michigan Law Review
Michigan Law Review
This Note examines the courts' accommodation of the labor and bankruptcy policies when a debtor in possession or trustee seeks to reject a collective bargaining agreement. Part I criticizes a series of recent cases that failed to confront the statutory conflict. If these courts had recognized the conflict between the language of the Bankruptcy Act (now the Code) and the Labor Act, they would have been forced to consider whether the labor and bankruptcy policies actually clashed. Part II finds that in most instances they do not, and argues that requiring the debtor in possession to bargain with the union …
Abandoning Bankruptcy Law's "Identity Of Interest" Exception, Michigan Law Review
Abandoning Bankruptcy Law's "Identity Of Interest" Exception, Michigan Law Review
Michigan Law Review
Section I of this Note discusses the goals and weaknesses of the identity of interest exception; Section II explains the advantages of consolidation and novation; and the final Section suggests a way to separate cases where novation is appropriate from those where consolidation is the preferred remedy.
Creditor Setoffs In Bankruptcy Reorganizations: An Analysis Of Baker V. Gold Seal Liquors, Inc., Michigan Law Review
Creditor Setoffs In Bankruptcy Reorganizations: An Analysis Of Baker V. Gold Seal Liquors, Inc., Michigan Law Review
Michigan Law Review
In an action between a debtor and a creditor, the debtor may seek to reduce his liability by pleading counterclaims. A permissive counterclaim-any claim against the creditor not arising out of the transaction or occurrence that is the subject matter of the creditor's claim--is typically termed a "setoff" to the extent that it does not involve affirmative relief. If the debtor is insolvent and seeks bankruptcy relief, setoffs may result in priorities whereby one creditor gains preference in the distribution of the debtor's estate over other creditors of the same class or even of a superior class. For example, if …