Law Commons^™

Helping Families Save Their Homes: The Role Of Bankruptcy Law: Hearing Before The S. Comm. On The Judiciary, 110th Cong., Nov. 19, 2008 (Statement Of Professor Adam Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

No abstract provided.

Sense And Sensibility In Securitization: A Prudent Legal Structure And A Fanciful Critique, Thomas E. Plank

Scholarly Works

This article responds to a recent critique that the securitization of receivables is a legally shaky financial product that survives only because it is too big to fail. This critique argues that securitization's success in avoiding the costs that the Bankruptcy Code imposes on secured credit, including a bankruptcy trustee's ability to use the cash collateral from the receivables, is a type of fraud that hinders or delays the creditors of the originators of receivables. The critique, however, fails. The cases cited for the author's fraud analysis do not support its thesis. Further, the critique fails to demonstrate that securitization's …

Identifying And Keeping The Genie In The Bottle: The Practical And Legal Realities Of Trade Secrets In Bankruptcy Proceedings, Sharon Sandeen

Faculty Scholarship

Anyone who has been paid attention to developments in the world of business over the past quarter century can attest to the fact that intellectual property (IP) is a hot commodity. Indeed, in contrast to the companies that emerged out of the Industrial Revolution, the companies that have spawned as part of the so-called “Information Age” attribute much of their value and future prospects to intangible, rather than tangible, assets. Unfortunately, while bankruptcy courts have generally recognized the need to distinguish between tangible and intangible assets, particularly when determining whether a claim is secured or unsecured, they often fail to …

Section 524(G) Without Compromise: Voting Rights And The Asbestos Bankruptcy Paradox, S. Todd Brown

Journal Articles

Section 524(g) of the Bankruptcy Code was adopted to protect unknown future asbestos personal injury victims' rights and prospects for financial recovery. To serve these goals and satisfy the demands of due process, Section 524(g) provides two basic forms of virtual representation for future victims - requiring the appointment of an independent legal representative and aligning the interests of future victims with current claimants (75% of whom must approve any plan that invokes Section 524(g)). In recent years, however, the 75% super-majority vote requirement has been transformed into a veto power wielded by a small group of law firms, who …

Trends In Distressed Debt Investing: An Empirical Study Of Investors' Objectives, Michelle M. Harner

Faculty Scholarship

Increased creditor control in chapter 11 cases has generated considerable debate over the past several years. Proponents of creditor control argue that, among other things, it promotes efficiency in corporate reorganizations. Critics assert that it destroys corporate value and frequently forces otherwise viable entities to liquidate. The increasing involvement of professional distressed debt investors in chapter 11 cases has intensified this debate. In this article, I present and analyze empirical data regarding the investment practices and strategies of distressed debt investors. Based on this data and actual case reports, I reach two primary conclusions. First, although relatively few in number, …

Selling It First, Stealing It Later: The Trouble With Trademarks In Corporate Transactions In Bankruptcy, Xuan-Thao Nguyen

Articles

Why does AI get two bites of the “Apple” trademark? Should AI be allowed to grant the right to use the trademark “perpetual and exclusive” with the sale of the music division and steal it back for free, ten years later? This article is part of an ongoing and broader inquiry into the intersection of trademark, contract and bankruptcy laws. This article argues that recent bankruptcy decisional law, notably the In re Exide Technologies decision, misunderstands the “perpetual and exclusive” trademark transaction, deeming it as an ordinary “license” when it is truly an outright sale. This article explains that the …

Get Sick, Get Out: The Medical Causes Of Home Mortgage Foreclosures, Christopher Robertson, Richard Egelhof, Michael Hoke

Faculty Scholarship

In recent years, there has been national alarm about the rising rate of home foreclosures, which now strike one in every 92 households in America and which contribute to even broader macroeconomic effects. The "standard account" of home foreclosure attributes this spike to loose lending practices, irresponsible borrowers, a flat real estate market, and rising interest rates. Based on our study of homeowners going through foreclosures in four states, we find that the standard account fails to represent the facts and thus makes a poor guide for policy. In contrast, we find that half of all foreclosures have medical causes, …

(Almost) Everything We Learned About Pleasing Bankruptcy Judges, We Learned In Kindergarten, Nancy B. Rapoport, Roland Bernier Iii

Scholarly Works

In this essay, we demonstrate that most ethics violations (at least the ones that irritate bankruptcy judges) are also violations of simple rules of behavior that people should have learned in kindergarten.

A Study Of Consumers' Post Discharge Finances: Struggle, Stasis, Or Fresh Start?, Lois R. Lupica, Jay L. Zagorsky Ph.D.

Faculty Publications

The postwar U.S. has experienced an extremely sharp rise in consumer bankruptcies. What happens to these consumers financially after filing for bankruptcy? Do filers catch up with their non-filing peers, stay a constant distance behind or fall further behind over time? This question is investigated empirically using a new set of financial and bankruptcy data obtained from a large national random survey of bankruptcy filers and non-filers. Along some simple financial dimensions, such as car ownership, bankruptcy filers are not disadvantaged compared to non-filers. Along more complex indicators, such as total income and net worth, filers catch up over time …

An Empirical Investigation Into Appellate Structure And The Perceived Quality Of Appellate Review, Rafael I. Pardo, Jonathan Remy Nash

Scholarship@WashULaw

Commentators have theorized that several factors may improve the process, and thus perhaps the accuracy, of appellate review: (1) review by a panel of judges, (2) subject-matter expertise in the area of the appeal, (3) other law-finding ability, (4) adherence to traditional notions of appellate hierarchy, and (5) the judicial independence of appellate judges. The considerable discussion that has expounded upon these theories has occurred in a vacuum of abstract generalization. This Paper adds a new dimension by presenting results from an empirical study of bankruptcy appellate opinions issued over a three-year period. The federal bankruptcy appellate structure provides certain …

Illness And Inability To Repay: The Role Of Debtor Health In The Discharge Of Educational Debt, Rafael I. Pardo

Scholarship@WashULaw

For a debtor to obtain a discharge of student loans in bankruptcy, the debtor must establish that their repayment would impose an undue hardship. This Article presents the results of an empirical study of bankruptcy court doctrine over a ten-year period that involved undue hardship discharge proceedings where the court reported information on the debtor's health status, monthly household income, and monthly household expenses. The data show that a medical condition increased a debtor's odds of being granted a discharge by 140% but that household income and expense levels did not have a statistically significant association with legal outcome. These …

The Corporate Governance And Public Policy Implications Of Activist Distressed Debt Investing, Michelle M. Harner

Faculty Scholarship

Activist institutional investors traditionally have invested in a company's equity to try to influence change at the company. Some of these investors, however, are now purchasing a company's debt for this same purpose. They may seek to change a company's management and board personnel, operational strategies, asset holdings or capital structure. The chapter 11 bankruptcy cases of Allied Holdings, Inc. and its affiliates exemplify the strategies of activist distressed debt investors. In the Allied cases, Yucaipa Companies, a distressed debt investor, purchased approximately 66% of Allied's outstanding general unsecured bond debt. Yucaipa used this debt position to exert significant influence …

Court-System Transparency, Lynn M. Lopucki

UF Law Faculty Publications

This article applies systems analysis to two ends. First, it identifies simple changes that would make the court system transparent. Second, it projects transparency's consequences. Transparency means that both the patterns across, and details of, case files are revealed to policymakers, litigants, and the public in easily understood forms. Government must make two changes to achieve court system transparency. The first is to remove the existing restrictions on the electronic release of court documents, including the requirements for registration, separate requests for each document, and monetary payment. The second - already being implemented in the federal courts - is to …

Bankruptcy's Rarity: An Essay On Small Business Bankruptcy In The United States, Edward R. Morrison

Faculty Scholarship

Most nations have enacted statutes governing business liquidation and reorganization. These statutes are the primary focus when policymakers and scholars discuss ways to improve laws governing business failure. This focus is misplaced, at least for distressed small businesses in the United States.

Evidence from a major credit bureau shows that over eighty percent of these businesses liquidate or reorganize without invoking the formal Bankruptcy Code.

The businesses instead invoke procedures derived from the laws of contracts, secured lending, and trusts. These procedures can be cheaper and speedier than a formal bankruptcy filing, but they typically require unanimous consent of senior, …

Making Sense Of Nation-Level Bankruptcy Filing Rates, Ronald J. Mann

Faculty Scholarship

Increased rates of consumer bankruptcy filings are a policy concern around the world. It is not easy, however, to explain the variations in per capita filing rates from country to country. Some of the variation is attributable to different levels of indebtedness. Some is attributable to different cultural attitudes about financial failure. And some is attributable to the accessibility of the legal system as a remedy for irremediable financial distress.

This paper analyzes the differences in nation-level, per capita filing rates. I start with a model that uses economic variables to explain nation-level variations in filing rates. The economic and …

Bankruptcy Vérité, Lynn M. Lopucki, Joseph W. Doherty

UF Law Faculty Publications

In Bankruptcy Fire Sales, 106 Michigan Law Review 1 (2007), we compared the recoveries from the going-concern bankruptcy sales of 25 large, public companies with the recoveries from the bankruptcy reorganizations of 30 large, public companies in the same period. We found that, controlling for the asset size of the company and its pre-sale or pre-reorganization earnings (EBITDA), reorganization recoveries were more than double sale recoveries. In Bankruptcy Noir, a reply forthcoming in the Michigan Law Review, Professor James J. White values the same set of companies differently to reach the finding that the sale recoveries are not statistically significantly …

Bankruptcy Noir, James J. White

Articles

In Bankruptcy Fire Sales, Professor LoPucki and Dr. Doherty do two things. First, they present provocative data about the relative payoff to be had in Chapter 11 by a full reorganization compared with the payoff from a section 363 sale without a full reorganization. Second, they give a yet more provocative explanation for their data. Taking a page from Professor LoPucki's recent book, they blame the meager return that they observe on 363 sales on the unprincipled behavior of the lawyers, managers, creditors, investment bankers, and even judges involved in the sales. Messrs. LoPucki and Doherty's data appear to …