Banking and Finance Law Commons^™

The Measure Of A Monitor's Role, Alejandro E. Gonzalez

Electronic Thesis and Dissertation Repository

This study examines the monitor, a court-appointed officer under the Companies’ Creditors Arrangement Act, in order to determine whether and how to best secure its independence. Concerns over the role are increasingly over whether it can maintain its supposed impartiality and avoid conflicts of interest. This study centers on its fiduciary duty, long discussed in the courts, as both problematic because it is not conclusively defined, and as the best means of establishing the monitor as a fair and impartial guardian of public confidence in Canadian insolvency law. By examining leading insolvency law theories, international and Canadian insolvency policy, and …

Bankruptcy For Banks: A Tribute (And Little Plea) To Jay Westbrook, David A. Skeel Jr.

All Faculty Scholarship

In this brief essay, to be included in a book celebrating the work of Jay Westbrook, I begin by surveying Jay’s wide-ranging contributions to bankruptcy scholarship. Jay’s functional analysis has had a profound effect on scholars’ understanding of key issues in domestic bankruptcy law, and Jay has been the leading scholarly figure on cross-border insolvency. After surveying Jay’s influence, I turn to the topic at hand: a proposed reform that would facilitate the use of bankruptcy to resolve the financial distress of large financial institutions. Jay has been a strong critic of this legislation, arguing that financial institutions need to …

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 …

Bank Resolution And Creditor Distribution: The Tension Shaping Global Banking –Part Ii: The Cross-Border Dimension, David Ramos, Javier Solana

University of Miami Business Law Review

New bank resolution frameworks that aim to address the complex task of managing the collapse of a large financial institution stand in considerable tension with basic principles and policy objectives of insolvency law. In this two-part study, we present an analytical framework that aims at helping us understand how this tension can undermine the effectiveness of the new bank resolution frameworks. In the first part of this article, we introduced our three-layered framework and explored its first two layers: the group dimension, and the duality of crisis-prevention and crisis-management tools. In this Part II, we explore the last layer: the …

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 …

A Canadian Lens On Third Party Litigation Funding In The American Bankruptcy Context, Stephanie Ben-Ishai, Emily Uza

Chicago-Kent Law Review

This Article offers two major recommendations to expand the use of third party litigation funding (“TPLF”) into the U.S. insolvency context. As seen in the Canadian context, courts have accepted the use of litigation funding agreements fitting within certain parameters. If U.S. courts follow suit, friction against the implementation of TPLF can be mitigated. Alternatively, regulation may occur through legislative and regulatory models to govern and set out precisely what types of arrangements are permitted. Involving entities such as the SEC may expedite the acceptance of TPLF, but special attention is necessary not to intermingle notions of fiduciaries into the …

The Avoidance Of Pre-Bankruptcy Transactions: An Economic And Comparative Approach, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Most insolvency jurisdictions provide several mechanisms to reverse transactions entered into by a debtor prior to the commencement of the bankruptcy procedure. These mechanisms, generally known as claw-back actions or avoidance provisions, may fulfil several economic goals. First, they act as an ex post alignment of incentives between factually insolvent debtors and their creditors, since the latter become the residual claimants of an insolvent firm but they do not have any control over the debtor´s assets while the company is not yet subject to a bankruptcy procedure. Thus, avoidance powers may prevent or, at least, reverse opportunistic behaviors faced by …

The Law And Finance Of Initial Coin Offerings, Aurelio Gurrea-Martinez, Nydia Remolina Leon

Research Collection Yong Pung How School Of Law

The rise of new technologies is changing the way companies raise funds. Along with the increase of crowdfunding in recent years, the use of Initial Coin Offerings (ICOs) has emerged more recently as a new form to raise capital. Companies in the United States raised more than $4 billion in 2017 and over $6.3 billion were raised through ICOs in the first three months of 2018. In a typical ICO, a company receives cryptocurrencies in exchange for certain rights embodied in “tokens”, whose nature, treatment and implications are generating controversy among securities regulators around the world.

A Bridge Over Troubled Waters - Resolving Bank Financial Distress In Canada, Janis P. Sarra

All Faculty Publications

Effective June 2017, Canada formalized its new resolution regime for “domestic systemically important banks”. This article examines the new resolution regime in the context of the early intervention program by the financial services regulator. The system offers a complex but integrated set of mechanisms to monitor the financial health of financial institutions, to intervene at an early stage of financial distress, and to resolve the financially distressed bank in a timely manner. Resolution is the restructuring of a financially distressed or insolvent bank by a designated authority. To “resolve” a bank is to use a series of tools under banking …

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 …

Savings And Loan Insolvency In The 80'S

Akron Law Review

This project is divided into five parts. Part I examines the federal statutory scheme for the supervision of federally-chartered savings and loans. The provisions of 12 U.S.C. § 1464 are examined closely to determine the extent of the power of the Federal Home Loan Bank Board to appoint a receiver. The due process implications of this process are examined in light of the United States Supreme Court's opinion in Fahey v. Mallonee. Finally, the question of the scope of judicial review of the Board's decision is examined. Whether the association is entitled to a review de novo is a question …

The Cape Town Convention’S Improbable-But-Possible Progeny Part Two: Bilateral Investment Treaty-Like Enforcement Mechanism, Charles W. Mooney Jr.

All Faculty Scholarship

This Essay is Part Two of a two-part essay series that outlines and evaluates two possible future international instruments. Each instrument draws substantial inspiration from the Cape Town Convention and its Aircraft Protocol (together, the “Convention”). The Convention governs the secured financing and leasing of large commercial aircraft, aircraft engines, and helicopters. It entered into force in 2006. It has been adopted by sixty-six Contracting States (fifty-eight of which have adopted the Aircraft Protocol), including the U.S., China, the E.U., India, Ireland, Luxembourg, Russia, and South Africa.

This Part of the Essay explores whether an investor-state dispute settlement (ISDS) feature …

The Bankruptcy Code’S Safe Harbors For Settlement Payments And Securities Contracts: When Is Safe Too Safe?, Charles W. Mooney Jr.

All Faculty Scholarship

This Article addresses insolvency law-related issues in connection with certain financial-markets contracts, such as securities contracts, commodity contracts, forward contracts, repurchase agreements (repos), swaps and other derivatives, and master netting agreements. The Bankruptcy Code provides special treatment—safe harbors—for these contracts (collectively, qualified financial contracts or QFCs). This special treatment is considerably more favorable for nondebtor parties to QFCs than the rules applicable to nondebtor parties to other contracts with a debtor. Yet even some strong critics of the safe harbors concede that some special treatment may be warranted. This Article offers a critique of the safe harbor for settlement payments, …

Standing To Sue A Carrier's Killers , Davis J. Howard

Pepperdine Law Review

No abstract provided.

A Test Case In International Bankruptcy Protocols: The Lehman Brothers Insolvency, Jamie Altman

San Diego International Law Journal

Part II of this Article, explains the competing theories underlying bankruptcy systems: universalism and territorialism. Part III details various statutory solutions to international bankruptcy problems. Next, Part IV analyzes the provisions of the Lehman Protocol in depth. Part V then examines the precedent upon which the Lehman Protocol relies. Part VI assesses potential threats to the Protocol?s success. This leads to Part VII, which contains suggestions for future protocols. Finally, Part VIII concludes.

“The Law Of Corporate Restructuring And Insolvency In Portugal: A Brief Introduction From A Financial Creditor’S Perspective", Bruno Ferreira

Bruno Ferreira

In times of economic slump, the law of restructuring and insolvency, particularly its statutory provisions, assume an indisputable relevance. The involvement of financial creditors in informal and formal restructuring procedures and the eventual ensuing formal insolvency procedures presents significant challenges and risks. This article provides a brief introduction to the law of restructuring and insolvency in Portugal and addresses some of these challenges and risks.

Corporate Groups And Crossborder Insolvencies: A Canada- United States Perspective, Jacob Zeigel

Fordham Journal of Corporate & Financial Law

No abstract provided.

The Problem Of Corporate Groups, A Comment On Professor Ziegel, Robert K. Rasmussen

Fordham Journal of Corporate & Financial Law

No abstract provided.

Reconciling The Dormant Conflict: Crafting A Banking Exception To The Fraudulent Conveyance Provision Of The Bankruptcy Code For Bank Holding Company Asset Transfers, Cassandra Jones Havard

All Faculty Scholarship

Banking law and bankruptcy law clash. This is most evident when a bank holding company (parent company) becomes insolvent after it has made an asset transfer to its financially troubled bank subsidiary.

The Bankruptcy Code (Code) governs the insolvency proceedings of the bank holding company. Predictably, the parent company's trustee, appointed for the protection of all the creditors of the bankrupt entity, uses the fraudulent conveyance provision of the Code to have any asset transfers that were made to the bank subsidiary returned to the debtor's estate. The good faith exception to that provision will protect the asset transfer only …

Back To The Parent: Holding Company Liability For Subsidiary Banks — A Discussion Of The Net Worth Maintenance Agreement, The Source Of Strength Doctrine, And The Prompt Corrective Action Provision, Cassandra Jones Havard

All Faculty Scholarship

Given the statutory goal of parental accountability, this Article focuses on a narrow issue: Whether parental guarantees are the most effective regulatory tool for shielding the federal deposit insurance fund from losses when insured banking subsidiaries that are members of a multibank holding company system are insolvent. This Article posits that a needed complement to parental guarantees is temporary substantive consolidation of a holding company's affiliated banks. This would require the parent company to combine the assets of its banking siblings to facilitate the reorganization of a financially troubled subsidiary. Temporary enterprise consolidation is a necessary regulatory tool because it …

Bankruptcy-Set-Off-Bank Deposits, A. E. Anderson S.Ed.

Michigan Law Review

Endorsers of a corporation's notes caused the corporation to make deposits in the payee bank in the regular course of business, knowing the corporation to be insolvent, and the bank took over the deposits within four months of adjudication in bankruptcy. It was contended that under the amended definition of "transfer" as set out in section 1 (30) of the Bankruptcy Act of 1938, this transaction resulted in a voidable preference to the endorsers under section 60. The trial court rejected this contention. On appeal, held, affirmed. Although the 1938 amendment gave a broader significance to the term "transfer" …

Rights Of Withdrawing Shareholder In Building & Loan Association

Indiana Law Journal

Notes and Comments: Insolvent Estates

Banks And Banking - Immunity Of National Banks From State Escheat Statute, Spencer E. Irons

Michigan Law Review

A Michigan statute provided that bank deposits, in the possession or control of insolvent banks, which have remained inactive for a period of seven years or more shall escheat to the state. In a suit for a declaratory judgment, filed by the Attorney General of Michigan, against the receiver of an insolvent national bank and the Comptroller of the Currency of the United States, the federal district court held that the receiver must turn over deposits coming within the terms of the statute. Held, the statute is invalid if so applied, since it would constitute an unlawful interference with …

Banks And Banking -Trusts - Right Of Bank To Sell Participating Trust Certificates In Self-Owned Property, Michigan Law Review

Michigan Law Review

In 1923 the trust company entered into a transaction with the land company by which the land company borrowed $130,000 with which it purchased a city property for slightly less than that amount and gave title to the trust company as security for the loan. Through a series of loans later negotiated the trust company came to have an investment of $150,000 in the property. In 1926 the trust company made an agreement with the land company pursuant to which the trust company declared itself trustee of the property at an appraised value almost fifty per cent above the purchase …

Fraudulent Conveyances - Contingent Creditors - Bank Stockholders' Double Liability, Charles V. Beck Jr.

Michigan Law Review

A holder of bank stock conveyed real estate to her daughter in consideration of love and affection, leaving the grantor with no other assets than the bank stock. At the time, the bank stock had a market value of eleven dollars a share, and the bank was advertising for depositors; there was nothing in the record to indicate insolvency. About two years later the bank closed, and the superintendent of banks assessed the stockholders the amount of their statutory double liability. When the transfer was discovered the superintendent brought action to set aside the conveyance as fraudulent to the creditors …

Some Problems Arising Out Of Deposits To Pay Principal And Interest On Bonds, Paul P. Lipton

Michigan Law Review

Since Lawrence v. Fox contracts students have been puzzled by the numerous and varying relations that may arise when A, the debtor, delivers money to B to pay C, his creditor. Equally puzzling and much more complicated are the rights and relations of the obligor, trustee and bondholders with respect to sums deposited with the trustee to pay principal and interest on bonds.

The insolvency during recent years of many large trust companies that had been named as trustees in indentures securing corporate bonds, having on hand at the time of their failure large sums of money which …

Banks And Banking - Relationship To Customers - Principal Or Creditor, Charles E. Nadeau

Michigan Law Review

A collection agreement permitted plaintiff to clear items through defendant bank in return for maintaining a balance of $10,000 which was not subject to check. All items received immediate credit, and twice weekly defendant bank remitted, in New York exchange, all amounts in excess of $10,000. On insolvency of defendant bank, plaintiff sought a preferred claim on the basis that the bank was its agent for collection. Held, where, as here, the bank may use the funds before remittance, or where the depositor may withdraw any part of the funds, the relationship is that of debtor-creditor and not of …

Trusts -Tracing Principles Applicable Where Funds Of Two Or More Cestuis Are Wrongfully Commingled, Michigan Law Review

Michigan Law Review

Public funds of a school district, of the village of Vassar, and of ten other municipalities were deposited in defendant bank without securing the deposit bond required by statute. After defendant bank had been declared insolvent, the school district intervened and sought to have the amount of its deposit impressed upon the cash assets of the bank as a trust, on the ground that the bank became a trustee ex maleficio. The total of the illegal deposits was greater than the cash on hand and the credits established in solvent correspondent banks at the time the receiver took over the …

Banks And Banking - Collections - Trust Or Debt, Michigan Law Review

Michigan Law Review

A certificate of deposit issued by A bank and owned by plaintiff was presented for collection in a routine clearance transaction between defendant bank and A bank. A bank paid for the several items presented with other items and a draft. The draft was dishonored. After both banks closed, defendant bank collected the amount of the draft from A bank as a preferred claim. Plaintiff seeks full payment of the certificate of deposit. Held, payment terminated the agency for collection and gave rise to a debtor-creditor relation, and, for this purpose, payment by draft was equivalent to any other …