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- Asset partitioning (2)
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Articles 1 - 6 of 6
Full-Text Articles in Bankruptcy Law
America Is Selling Its Seniors Short, Constantine N. Katsoris
America Is Selling Its Seniors Short, Constantine N. Katsoris
Faculty Scholarship
No abstract provided.
Clearinghouses As Liquidity Partitioning, Richard Squire
Clearinghouses As Liquidity Partitioning, Richard Squire
Faculty Scholarship
To reduce the risk of another financial crisis, the Dodd-Frank Act requires that trading in certain derivatives be backed by clearinghouses. Critics mount two main objections: a clearinghouse shifts risk instead of reducing it; and a clearinghouse could fail, requiring a bailout. This Article’s observation that clearinghouses engage in liquidity partitioning answers both. Liquidity partitioning means that when one of its member firms becomes bankrupt, a clearinghouse keeps a portion of the firm’s most liquid assets, and a matching portion of its short-term debt, out of the bankruptcy estate. The clearinghouse then applies the first toward immediate repayment of the …
New Formalism In The Aftermath Of The Housing Crisis, Nestor M. Davidson
New Formalism In The Aftermath Of The Housing Crisis, Nestor M. Davidson
Faculty Scholarship
The housing crisis has left in its wake an ongoing legal crisis. After housing markets began to collapse across the country in 2007, foreclosures and housing-related bankruptcies surged significantly and have barely begun to abate more than six years later. As the legal system has confronted this aftermath, courts have increasingly accepted claims by borrowers that lenders and other entities involved in securitizing mortgages failed to follow requirements related to perfecting and transferring their security interests. These cases – which focus variously on issues such as standing, real party in interest, chains of assignment, the negotiability of mortgage notes, and …
Strategic Liability In The Corporate Group , Richard Squire
Strategic Liability In The Corporate Group , Richard Squire
Faculty Scholarship
The typical large corporation divides itself into numerous subsidiaries but then overrides the liability barriers between them by having the subsidiaries and the parent company cross-guarantee each other's major debts. Previous scholarly theories of the corporate group cannot explain why. The leading theory posits that the subsidiaries make it easier for creditors to evaluate risk because they enable each creditor to lend against a discrete asset pool within the broader enterprise. But any such efficiency would be undercut by the guarantees, which transmit credit risk across subsidiary boundaries. This Article argues that the combination of subsidiaries and intragroup guarantees reflects …
The Case For Symmetry In Creditors' Rights, Richard Squire
The Case For Symmetry In Creditors' Rights, Richard Squire
Faculty Scholarship
Using an original framework for evaluating bankruptcy rules, this article casts doubt on the efficiency of legal arrangements that give some creditors an absolute advantage over others in the division of a debtor's assets. Such arrangements, which I classify as asymmetrical, are widely used in the modem economy, and include the secured loan, American general partnership, and guaranty contract. In contrast, symmetrical arrangements, which include the corporation and common law partnership, confer no absolute advantage, because they give each creditor group a prior claim to a distinct debtor asset pool. I demonstrate that symmetrical arrangements produce lower debt appraisal costs, …
How The Old World Encountered The New One: Regulatory Competition And Cooperation In European Corporate And Bankruptcy Law , Luca Enriques, Martin Gelter
How The Old World Encountered The New One: Regulatory Competition And Cooperation In European Corporate And Bankruptcy Law , Luca Enriques, Martin Gelter
Faculty Scholarship
The European framework for creditor protection has undergone a remarkable tansfomation in recent years. While the European Court of Justices Centros case and its progeny have given European Union businesses choice with respect to the state of incorporation, and hence to the substantive corporate law regime, the European Insolvency Regulation has introduced uniform conflict-of-law rules for insolvencies. However, this regime has opened up some forum shopping opportunities for corporate debtors. Both regulatory competition in corporate law and forum shopping in bankruptcy law have been discussed in the United States for years, while they are relativey new territory in the European …