Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 2 of 2
Full-Text Articles in Law
Relational Preferences In Chapter 11 Proceedings, Brook E. Gotberg
Relational Preferences In Chapter 11 Proceedings, Brook E. Gotberg
Faculty Publications
It is no secret that creditors hate so-called "preference" actions, which permit a debtor to recover payments made to creditors on the eve of bankruptcy for the benefit of the estate. Nominally, preference actions are intended to equalize the extent to which each unsecured creditor must bear the loss of a bankruptcy discharge, or to discourage creditors from rushing to collect from the debtor in such a way that will push an insolvent debtor into bankruptcy. But empirical evidence strongly suggests that, at least in chapter 11 reorganization proceedings, preference actions do not fulfill either of these stated goals. Interviews …
Optimal Deterrence And The Preference Gap, Brook E. Gotberg
Optimal Deterrence And The Preference Gap, Brook E. Gotberg
Faculty Publications
This Article is the first of its kind to argue that preference law is ineffective as a deterrent of collection behavior based on empirical evidence, drawn from interviews of actors within the field-debtors, creditors, and the attorneys who represented them in bankruptcy proceedings. This Article reports on interviews of sampled individuals who participated in successful 7 Chapter 11 reorganization cases involving preference actions. The overwhelming and indisputable conclusion from these interviews is that creditors may adjust their behavior in response to preference law, but not in ways that further the purported goal of preference deterrence. Accordingly, if preference law is …