Law Commons^™

Law School News: Should Prison Be Abolished? 10-6-2022, Michael M. Bowden

Life of the Law School (1993- )

No abstract provided.

Building A Restructuring Hub: Lessons From Singapore, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

This article analyses the legal, market and institutional features needed to become an international hub for debt restructuring. For that purpose, it explores the strategy followed by Singapore, as well as the market and institutional factors generally found in other leading centres for legal and financial services such as the United States, the United Kingdom and Hong Kong. In jurisdictions traditionally having creditor-oriented insolvency systems, such as the United Kingdom, Hong Kong and Singapore, one of the primary challenges for the improvement of the restructuring framework for debtors consists of making sure that the insolvency system remains protective of the …

Insolvency Law In Emerging Markets, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

A well-functioning corporate insolvency system can serve as a valuable tool to promote entrepreneurship, innovation, access to finance and economic growth. Therefore, if having an efficient insolvency framework is essential for any country, it becomes even more important for emerging economies due to their potential for growth and their greater financial needs. Unfortunately, the academic literature has generally paid more attention to the regulation of corporate insolvency in developed countries. Thus, with some notable exceptions, it has largely omitted the debate about the optimal design of insolvency law in jurisdictions that, in addition to requiring a more active policy debate, …

Implementing An Insolvency Framework For Micro And Small Firms, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Micro-, small-, and medium-sized enterprises (MSMEs) represent the vast majority of businesses in most countries around the world. Despite the economic relevance of these firms, most insolvency jurisdictions do not provide adequate responses to MSMEs. Moreover, with a few exceptions, the academic literature on insolvency law has not traditionally focused on the treatment of MSMEs in insolvency. This article seeks to contribute to the debate by exploring the primary features and problems of MSMEs in insolvency as well as the weaknesses of the ordinary insolvency framework to deal with MSMEs. It also provides a general overview of the primary reforms …

The Rise Of Pre-Packs As A Restructuring Tool: Theory, Evidence And Policy, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

The use of pre-packs as a restructuring tool has been traditionally popular in the United Kingdom and the United States. In recent years, however, several jurisdictions around the world, including Singapore, India, Spain, the Netherlands, and the Philippines have promoted the use of pre-packs. By shortening the length of insolvency proceedings, pre-packs have the ability to reduce the costs of financial distress, and especially those associated with the loss of reputation, employees, suppliers and goodwill. Thus, pre-packs can help maximise the value of the firm for the benefit of debtors, creditors and society as a whole. However, the conflict of …

The Future Of Insolvency Law In A Post-Pandemic World, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

The COVID-19 crisis has encouraged many countries to amend their insolvency laws. In most cases, these amendments took place temporarily – especially during the hibernation phase of the pandemic. In other countries, however, the pandemic has led to permanent changes in the insolvency legislation. More importantly, the COVID-19 crisis has accelerated the insolvency reforms already existing in the political agenda of many countries, and it has encouraged other jurisdictions to reassess the desirability of their insolvency and restructuring frameworks. This article analyzes the current trends, reforms and policy discussions that are expected to reshape the future of insolvency law in …

Singapore’S Special Insolvency Scheme For Small Companies, Vincent Ooi, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

In this article, the authors examine a temporary program in Singapore to help micro and small businesses facing insolvency amid the COVID-19 crisis.

The Future Of Reorganization Procedures In The Era Of Pre-Insolvency Law, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Several countries and regions around the world, including Singapore, the United Kingdom, and the European Union, are amending their restructuring framework to implement a pre-insolvency mechanism that includes most of the features that exist in the US Chapter 11 reorganization procedure. However, unlike what happens in the United States, where unsuccessful reorganizations lead to Chapter 7 liquidations, companies using this ‘de facto Chapter 11’ (DFCH11) are still allowed to use formal reorganization procedures. This article argues that, while the rise of the DFCH11 is not necessarily undesirable provided that various protections are put in place, jurisdictions implementing this restructuring tool …

Singapore's Legal And Economic Response To The Covid-19 Crisis: The Role Of Insolvency Law And Corporate Workouts, Aurelio Gurrea-Martinez, Samuel Loh

Research Collection Yong Pung How School Of Law

The international spread of the coronavirus has forced many countries to put their economies into ‘hibernation’, leading to one of the worst recessions observed in modern times. Since Singapore is not isolated from this crisis, the Government had to intervene by adopting a very ambitious package of legal and financial measures to support businesses, households and employees. Among these measures, the Government has implemented various temporary changes to the insolvency legislation, and the use of out-of-court agreements has been encouraged for debtors facing financial trouble. This article argues that, while insolvency law can play an important role in the current …

The Tax Treatment Of Haircuts In Financial Reorganizations, Aurelio Gurrea-Martinez, Vincent Ooi

Research Collection Yong Pung How School Of Law

Over the past few years, Singapore has implemented various ambitious insolvency reforms aimed at making the country an international hub for debt restructuring. This article argues that while Singapore has put in place one of the most sophisticated restructuring frameworks in the world, some tax reforms might be useful to maximise the potential of this new restructuring framework. Namely, it will be pointed out that the tax treatment of debt forgiveness granted by creditors in corporate reorganisation (‘haircuts’) should be reviewed. Under the current legislation, these haircuts may be treated as taxable income. As a result, financially distressed debtors may …

Insolvency Law In Times Of Covid-19, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

The international spread of the coronavirus is not only generating dramatic consequences from a social perspective but it is also heavily affecting the global economy. For this reason, governments, financial regulators and international organizations are responding to the coronavirus with a package of legal, economic and financial measures. Among the legal responses included in these packages, many countries, such as Australia, Belgium, Colombia, Czech Republic, France, Germany, Luxembourg, India, Italy, New Zealand, Peru, Poland, Portugal, Russia, Singapore, Spain, the United Kingdom, and the United States, have proposed or implemented temporary changes to their insolvency frameworks. This paper starts by discussing …

The Characterization Of Pre-Insolvency Proceedings In Private International Law, Adrian Walters, Irit Mevorach

All Faculty Scholarship

The decade since the fnancial crisis has witnessed a proliferation of various ‘light touch’ fnancial restructuring techniques in the form of so-called pre-insolvency proceedings. These proceedings inhabit a space on the spectrum of insolvency and restructuring law, somewhere between a pure contractual workout, the domain of contract law, and a formal insolvency or rehabilitation proceeding, the domain of insolvency law. While, to date, international insolvency instruments have tended to defne insolvency proceedings quite expansively, discussion of the cross-border implications of pre-insolvency proceedings has barely begun. The question is whether pre-insolvency proceedings should qualify as proceedings related to insolvency for the …

Law School News: 'Injustice Dehumanizes Everyone It Touches' 1-31-2020, Michael M. Bowden

Life of the Law School (1993- )

No abstract provided.

Restructuring Vs. Bankruptcy, Jason Roderick Donaldson, Edward R. Morrison, Giorgia Piacentino, Xiaobo Yu

Faculty Scholarship

We develop a model of a firm in financial distress. Distress can be mitigated by filing for bankruptcy, which is costly, or preempted by restructuring, which is impeded by a collective action problem. We find that bankruptcy and restructuring are complements, not substitutes: Reducing bankruptcy costs facilitates restructuring, rather than crowding it out. And so does making bankruptcy more debtor-friendly, under a condition that seems likely to hold now in the United States. The model gives new perspectives on current relief policies (e.g., subsidized loans to firms in bankruptcy) and on long-standing legal debates (e.g., the efficiency of the absolute …

Flotsam, Financing And Flotation: Is Canada “Resolution Ready” For Insurance Company Insolvency?, Janis P. Sarra

All Faculty Publications

Insurance represents almost 2 per cent of Canada’s gross domestic product (GDP), yet there is little public policy discussion regarding the viability of the companies that insure Canadians or about the policyholder protection and resolution regime that underpins the provision of these services. As new products and technology develop, and as the complexity of multinational insurance enterprises increases, new risks pose challenges for Canada’s oversight and policyholder protection regimes. This article provides an overview of the insolvency regime for insurers in Canada, focusing primarily on the federal regime as the exemplar of how Canadian regulators and the insurance industry have …

Reflections On Two Years Of P.R.O.M.E.S.A., David A. Skeel Jr.

All Faculty Scholarship

This Essay draws both on my scholarly and on my personal experience as a member of Puerto Rico’s oversight board to assess the first two years of the Board’s existence. I begin in a scholarly mode, by exploring the question of where P.R.O.M.E.S.A., the legislation that created the Board, came from. P.R.O.M.E.S.A.’s core provisions are, I will argue, the product of two historical patterns that have emerged in responses to the financial distress of public entities in the United States. The first dates back to the 1970s crisis in New York City, while the second is much more recent. If …

Do Economic Conditions Drive Dip Lending?: Evidence From The Financial Crisis, Frederick Tung

Faculty Scholarship

When contemplating Chapter 11, the first step for many firms is to seek financing for their continuing operations in bankruptcy. Because such financing would otherwise be hard to find, the Bankruptcy Code authorizes debtors to offer sweeteners to debtor-in-possession (DIP) lenders. These inducements can be highly effective in attracting financing. But because these sweeteners are thought to come at the expense of other stakeholders, the Code permits these inducements only if the judge determines that no less generous a package would have been sufficient to obtain the loan.

Anecdotal evidence suggests that the use of certain controversial inducements—I focus on …

Statement On 'Bringing Justice Closer To The People: Examining Ideas For Restructuring The Ninth Circuit', Arthur D. Hellman

Testimony

Congress is once again considering legislation to divide the largest of the federal judicial circuits, the Ninth. On March 16, 2017, a subcommittee of the House Judiciary Committee held a hearing on “Bringing Justice Closer to the People: Examining Ideas for Restructuring the Ninth Circuit.” This statement was submitted for the record of the hearing.

The statement addresses three questions. First, what considerations should Congress take into account in determining whether to restructure the Ninth Circuit? Second, if restructuring is desirable, how should the legislation be drafted? Third, how do pending House bills measure up?

The burden is on those …

Hedge Fund Activism, Poison Pills, And The Jurisprudence Of Threat, William W. Bratton

All Faculty Scholarship

This chapter reviews the single high profile case in which twentieth century antitakeover law has come to bear on management defense against a twenty-first century activist challenge—the Delaware Court of Chancery’s decision to sustain a low-threshold poison pill deployed against an activist in Third Point LLC v. Ruprecht. The decision implicated an important policy question: whether a twentieth century doctrine keyed to hostile takeovers and control transfers appropriately can be brought to bear in a twenty-first century governance context in which the challenger eschews control transfer and instead makes aggressive use of the shareholder franchise. Resolution of the question …

A Two-Step Plan For Puerto Rico, Clayton P. Gillette, David A. Skeel Jr.

All Faculty Scholarship

Few still believe that Puerto Rico is capable of meeting all of its financial obligations and continuing to provide basic services. The territory is already in default, and conditions are rapidly deteriorating. Is there a way forward? We think there is. In this short article, we outline a two-part plan for correcting Puerto Rico’s most urgent fiscal and financial problems.

The first step is to create an independent financial control board that has authority over Puerto Rico’s budgets and related issues. Notwithstanding concerns that an externally imposed financial control board (FCB) may interfere with the decision making processes of democratically …

A No-Tribunal Sdrm And The Means Of Binding Creditors To The Terms Of A Restructuring Plan, Charles W. Mooney Jr.

All Faculty Scholarship

The paper addresses two discrete but related and essential attributes of a sovereign debt restructuring mechanism (SDRM). It first considers the merits and feasibility of an SDRM that would provide a procedure for proposing and adopting a restructuring plan for a sovereign debtor’s debt which would not involve any tribunal or administrator (a No-Tribunal SDRM). The No-Tribunal SDRM would undertake the restructuring as if the sovereign debtor and its creditors were subject to the Model CAC regime. In addition to embodying a novel and interesting structure for an SDRM—and one that eliminates the difficult hurdle of identifying a satisfactory tribunal—adoption …

A Framework For A Formal Sovereign Debt Restructuring Mechanism: The Kiss Principle (Keep It Simple, Stupid) And Other Guiding Principles, Charles W. Mooney Jr.

All Faculty Scholarship

Given the ongoing work on a multilateral restructuring process for sovereign debt in the UN, consideration of the content and implementation of a sovereign debt restructuring mechanism (SDRM) is timely. The framework and content of the SDRM proposed here differs from earlier proposals in several important respects. For the classification and supermajority voting of claims in the approval a restructuring plan, it would mimic the structure and operation of the model collective action clauses (Model CACs) proposed by the International Capital Markets Association. Restructuring under a qualified sovereign debt restructuring law (QSDRL) would be guided by four principles: (i) observe …

Demand Response And Market Power, Bruce R. Huber

Journal Articles

In her article, Bypassing Federalism and the Administrative Law of Negawatts, Sharon Jacobs educates her readers about the concept of demand response, and then describes its propagation in recent years while making the broader argument that the Federal Energy Regulatory Commission (“FERC”) — the federal government’s principal energy regulator — has engaged in a strategy of “bypassing federalism” that may entail more costs than benefits. Professor Jacobs is right to call attention to demand response and to FERC’s approach to matters of jurisdictional doubt. While I share many of her concerns about boundary lines in a federal system, I argue …

Activist Investors, Distressed Companies, And Value Uncertainty, Michelle M. Harner, Jamie Marincic Griffin, Jennifer Ivey-Crickenberger

Faculty Scholarship

Hedge funds, private equity firms, and other alternative investment funds are frequently key players in corporate restructurings. Most commentators agree that the presence of a fund can change the dynamics of a chapter 11 case. They cannot agree, however, on the impact of this change—i.e., do funds create or destroy enterprise value? This essay contributes to the dialogue by analyzing data from chapter 11 cases in which funds are in a position to influence the debtor’s exit strategy. The data shed light on what such funds might achieve in chapter 11 cases and the potential implications for debtors and their …

Breaking Bankruptcy Priority: How Rent-Seeking Upends The Creditors' Bargain, Frederick Tung, Mark J. Roe

Faculty Scholarship

Bankruptcy reallocates value in a faltering firm. The bankruptcy apparatus eliminates some claims and alters others, leaving a reduced set of claims to match the firm’s diminished capacity to pay. This restructuring is done according to statutory and agreed-to contractual priorities, so that lower-ranking claims are eliminated first and higher ranking ones are preserved to the extent possible. Bankruptcy scholarship has long conceptualized this reallocation as a hypothetical bargain among creditors: creditors agree in advance that if the firm falters, value will be reallocated according to a fixed set of predetermined rules and contracts. In any given reorganization case, creditors …

Employer Costs And Conflicts Under The Affordable Care Act, Peter Molk

UF Law Faculty Publications

In January 2015, qualified employers must provide health care coverage under the Patient Protection and Affordable Care Act of 2010 or face a fine. As employers actively attempt to minimize the costs that they will incur, the possibility emerges that employers will retaliate against or harass employees who seek coverage. This Essay discusses the protections for employees under the law and the possible deficiencies in the law. It shows that employers and employees often have contrasting incentives – employers to avoid coverage, and employees to take coverage – and these incentives may result in employer harassment and retaliation of employees. …

Reader's Digest, Walter Machnicki

Chapter 11 Bankruptcy Case Studies

No abstract provided.

Mesa Airlines, Brittany Brent, Lindy Harris

Chapter 11 Bankruptcy Case Studies

No abstract provided.

Solyndra, Brandon Brewer, Matthew Kinsey, Anthony Mendenhall

Chapter 11 Bankruptcy Case Studies

No abstract provided.

In Re Jazz Photo Corp., Archie Carden, Cory Swainston

Chapter 11 Bankruptcy Case Studies

No abstract provided.