Bankruptcy Law Commons^™

Stakeholder Capitalism’S Greatest Challenge: Reshaping A Public Consensus To Govern A Global Economy, Leo E. Strine Jr., Michael Klain

Seattle University Law Review

The Berle XIV: Developing a 21st Century Corporate Governance Model Conference asks whether there is a viable 21st Century Stakeholder Governance model. In our conference keynote article, we argue that to answer that question yes requires restoring—to use Berle’s term—a “public consensus” throughout the global economy in favor of the balanced model of New Deal capitalism, within which corporations could operate in a way good for all their stakeholders and society, that Berle himself supported.

The world now faces problems caused in large part by the enormous international power of corporations and the institutional investors who dominate their governance. These …

Delegated Corporate Voting And The Deliberative Franchise, Sarah C. Haan

Seattle University Law Review

Starting in the 1930s with the earliest version of the proxy rules, the Securities and Exchange Commission (SEC) has gradually increased the proportion of “instructed” votes on the shareholder’s proxy card until, for the first time in 2022, it required a fully instructed proxy card. This evolution effectively shifted the exercise of the shareholder’s vote from the shareholders’ meeting to the vote delegation that occurs when the share-holder fills out the proxy card. The point in the electoral process when the binding voting choice is communicated is now the execution of the proxy card (assuming the shareholder completes the card …

Robo-Voting: Does Delegated Proxy Voting Pose A Challenge For Shareholder Democracy?, John Matsusaka, Chong Shu

Seattle University Law Review

Robo-voting is the practice by an investment fund of mechanically voting in corporate elections according to the advice of its proxy advisor— in effect fully delegating its voting decision to its advisor. We examined over 65 million votes cast during the period 2008–2021 by 14,582 mutual funds to describe and quantify the prevalence of robo-voting. Overall, 33% of mutual funds robo-voted in 2021: 22% with ISS, 4% with Glass Lewis, and six percent with the recommendations of the issuer’s management. The fraction of funds that robo-voted increased until around 2013 and then stabilized at the current level. Despite the sizable …

Capitalism Stakeholderism, Christina Parajon Skinner

Seattle University Law Review

Today’s corporate governance debates are replete with discussion of how best to operationalize so-called stakeholder capitalism—that is, a version of capitalism that considers the interests of employees, communities, suppliers, and the environment alongside (if not before) a company’s shareholders. So much focus has been dedicated to the question of capitalism’s reform that few have questioned a key underlying premise of stakeholder capitalism: that is, that competitive capitalism does not serve these various constituencies and groups. This Essay presents a different view and argues that capitalism is, in fact, the ultimate form of stakeholderism. As such, the Essay urges that the …

Creditors, Shareholders, And Losers In Between: A Failed Regulatory Experiment, Albert H. Choi, Jeffery Zhang

Law & Economics Working Papers

In the aftermath of the 2007-08 Global Financial Crisis, regulators encouraged many of the world’s largest banks to hold a new type of regulatory instrument with the goal of improving their safety and soundness. The regulatory instrument was known as a “CoCo,” short for contingent convertible bond. CoCos are neither debt nor equity. They are something in between, designed to give the bank a shot in the arm during times of stress. Many of the largest international banks have issued CoCos worth hundreds of billions of dollars. After more than ten years—a decade that includes the collapse of Credit Suisse …

Rethinking Antebellum Bankruptcy, Rafael I. Pardo

Scholarship@WashULaw

Bankruptcy law has been repeatedly reinvented over time in response to changing circumstances. The Bankruptcy Act of 1841—passed by Congress to address the financial ruin caused by the Panic of 1837—constituted a revolutionary break from its immediate predecessor, the Bankruptcy Act of 1800, which was the nation’s first bankruptcy statute. Although Congress repealed the 1841 Act in 1843, the legislation lasted significantly longer than recognized by scholars. The repeal legislation permitted pending bankruptcy cases to be finally resolved pursuant to the Act’s terms. Because debtors flooded the judicially understaffed 1841 Act system with over 46,000 cases, the Act’s administration continued …

Bankruptcy Fiduciaries, Christopher D. Hampson

UF Law Faculty Publications

Does social enterprise end with insolvency? Is bankruptcy all about the bottom line? The answer to these questions begins with understanding the estate in bankruptcy and the fiduciaries that control its fate. Yet the law of fiduciary duties in bankruptcy is undertheorized, conflicted, and muddled. After almost fifty years of confusion, this Article provides the first comprehensive examination of the nature and source of fiduciary duties in bankruptcy. Although the Supreme Court has intoned “maximize the value of the estate” as a shorthand, I argue that the trustee’s duty of obedience in reorganization cases gives rise to a “duty to …

Punishing Debtors In Bankruptcy During Covid-19, David Y. Kamins

Brooklyn Journal of Corporate, Financial & Commercial Law

The 2019 Coronavirus Pandemic (COVID-19) led to widespread government-mandated lockdowns, causing numerous businesses to close their doors permanently. To assist financially distressed businesses and individuals during the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Small Business Administration (SBA)—the agency tasked with implementing the CARES Act—distributed funds to individuals and businesses through the Paycheck Protection Program (PPP). Part of the SBA’s eligibility requirements to receive funding through the PPP included an exclusion provision that barred debtors presently involved in any bankruptcy proceeding from receiving any PPP funding. Many debtors in bankruptcy filed suits in …

Understanding The Neutrals In Canadian Insolvency Proceedings, Stephanie Ben-Ishai, Meena Alnajar

Articles & Book Chapters

No abstract provided.

Johnson, John T., 1820-1875 (Sc 3699), Manuscripts & Folklife Archives

MSS Finding Aids

Finding aid and scan (Click on "Additional Files" below) for Manuscripts Small Collection 3699. Case file for T. T. Melburn v. John T. Johnson, U.S. District Court for the District of Kentucky, filed 26 May 1870. Petitioner Melburn, a carpenter and stair builder of Bowling Green, Kentucky, sought an accounting for transactions during his 1869-1870 partnership with Johnson, also a carpenter, of Woodburn, Kentucky, claiming that Johnson had misappropriated assets of the firm and had committed an act of insolvency by transferring land to a relative. The inquiry, conducted by Warner Underwood as Register in Bankruptcy, included depositions from …

A Revised Perspective On Non-Debtor Releases, Joshua M. Silverstein

Faculty Scholarship

“Non-debtor releases” are bankruptcy orders that extinguish claims against a party other than a bankrupt debtor over the objection of the creditor. Also known as “third-party releases,” the legality of these orders is one of the most important and controversial issues in bankruptcy law specifically and business law generally. The split in the courts over the propriety of non-debtor releases stretches back thirty-five years. However, the United States Supreme Court is poised to resolve the split this term in the Purdue Pharma bankruptcy. In two prior articles published in 2006 and 2009, I argued that third-party releases are permissible under …

Divide, "Two-Step," And Conquer: How Johnson & Johnson Spurred The Bankruptcy System, Patrick Maney

University of Cincinnati Law Review

No abstract provided.

Coordination Of The Uniform Commercial Code And Common Law, Kenneth C. Kettering

University of Cincinnati Law Review

Deciding whether an issue that is in the ambit of a statute should be resolved by reference to the statute alone, or whether other sources of law should be applied, is a common interpretative task. The Uniform Commercial Code ("UCC") contains rules of interpretation that address the subject, and those rules have not been altered since the UCC was first generally enacted. Nevertheless, questions often arise on the subject under the UCC. This paper examines the UCC rules on point. The analysis is germane to the interpretation and drafting of other statutes that codify rules of private law.

A Historical Account Of The Orderly Payment Of Debts Act Reference: Limiting Provincial Efforts To Protect Insolvent Debtors, Thomas Gw Telfer, Virginia Torrie

Dalhousie Law Journal

This paper analyzes the history of the Alberta Orderly Payment of Debts Act and the constitutional controversy that followed. The legislation sought to protect debtors by imposing restrictions on creditors. In 1960, the Supreme Court of Canada in Reference re Validity of Orderly Payment of Debts Act, 1959 (Alberta) ruled that the legislation was ultra vires on the basis that it interfered with the federal bankruptcy and insolvency power. The Orderly Payment of Debts Act reference is the capstone in a trilogy of cases in which provincial legislation was invalidated for encroaching upon the federal bankruptcy and insolvency power. The …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

Table of Contents

Show Me The Money: How Bankruptcy Courts Could Become The Most Equitable Mass Tort Forum, Olivia Maier

Washington and Lee Journal of Civil Rights and Social Justice

The Texas Two-Step has emerged as a dangerous bankruptcy maneuver for companies to defend against mass tort liability. The process allows a company to allocate all of its tort liability to a newly created company which then files for bankruptcy. The Bankruptcy Code provides instantaneous benefits for that new company, which tort victims are left unable to proceed with their claims. This has resulted in an inequitable process, and outcomes, for those victims as seen by the recent Johnson & Johnson Texas Two-Step. While this process is unjust, it has raised an interesting question: could a bankruptcy court become the …

Silencing Litigation Through Bankruptcy, Pamela Foohey, Christopher K. Odinet

Articles

Bankruptcy is being used as a tool for silencing survivors and their families. When faced with claims from multiple plaintiffs related to the same wrongful conduct that can financially or operationally crush the defendant over the long term—a phenomenon we identify as onslaught litigation—defendants harness bankruptcy’s reorganization process to draw together those who allege harm and pressure them into a swift, universal settlement. In doing so, they use the bankruptcy system to deprive survivors of their voice and the public of the truth. This Article identifies this phenomenon and argues that it is time to rein in this destructive use …

The Housing Bubble And Consumer Banruptcy (Parts Iii And Iv), David G. Carlson

Articles

During the COVID pandemic housing prices have soared. Consumers who have filed for bankruptcy are now looking at enormous realized and unrealized capital gains. This article assesses the chances that these consumer debtors can keep these gains out of the hands of their creditors. Part II of this two-part article addresses chapter 13 issues, which concern plan modification by the chapter 13 trustee to capture realized and unrealized capital gains. It also covers whether a trustee in a converted case can capture these gains. The law of the coverted chapter 7 case is spectacularly contradictory.

Brief For Amici Curiae Bankruptcy Law Professors In Support Of Petitioner, Pamela Foohey

Amicus Briefs

Amici, whose names and affiliations are set forth in alphabetical order on Appendix A, are law professors who study the United States’ bankruptcy system. They have published in some of the nation’s leading academic journals on corporate reorganization issues, including the case sub judice. They write solely based on their concern about the effect that the opinion below will have on this system.

Petitioner argues that the decision of the Second Circuit Court of Appeals in this case should be reversed because the United States Bankruptcy Code does not permit the nonconsensual nondebtor release (“NDR”) of the Debtors’ owners (the …

Brief Of Amici Curiae Law Professors In Support Of Appellant On The Role Of Bankruptcy Examiners In Chapter 11 Reorganization, Pamela Foohey

Amicus Briefs

Amici curiae, whose biographical information appears on Appendix A (“Amici”), are professors at law schools in the Third Circuit and around the nation. They study and write extensively about bankruptcy and related business law subjects. Their work has appeared in many of the nation’s leading academic journals, and includes path-breaking scholarship on the use of bankruptcy examiners in freefall and cryptocurrency cases.

Amici share a commitment to the transparent and efficient administration of the chapter 11 system, and a belief that the interest of the public and creditors in this large and notorious chapter 11 case must be vindicated …

Proposal For A New Regulation Of Speculation In Sovereign Debt, Justin Vanderschuren

Fellow, Adjunct, Lecturer, and Research Scholar Works

Over the past few years, several countries have undertaken to regulate the speculation in sovereign debt pursued by so-called “vulture funds.” The various realizations and attempts present a series of loopholes that make a new regulation of this speculation advisable. A proposal for a new regulation, legally justified and precisely framed, is all the more desirable given that some legislators, in particular from the New York State Legislature, have recently taken up the issue of speculation.

Debt sustainability is the only realistic regulation benchmark. It is inconceivable to ban debt purchases on the secondary market as this would significantly impact …

Sovereign Debt Speculation: A Necessary Restraint Justified By A Concern For Debt Sustainability, Justin Vanderschuren

Fellow, Adjunct, Lecturer, and Research Scholar Works

The actions of funds speculating in sovereign debt, frequently nicknamed “vulture funds”, are often roundly criticized. These funds purchase distressed debts on the secondary market at reduced prices and then seek payment in court at face value plus interest and fees. Although their actions are legally justified, so-called “vulture funds” are vilified due to the negative impact of their activities on sovereign debtors and their population. While there is a strong demand for regulating sovereign debt speculation, various solutions already exist but are, in many ways, insufficient. This article argues for the adoption of a tailored regulation of the speculative …

Modular Bankruptcy: Toward A Consumer Scheme Of Arrangement, John A. E. Pottow

Law & Economics Working Papers

The world of international bankruptcy has seen increasing use of the versatile scheme of arrangement, a form of corporate reorganization available under English law. A key feature of the scheme is its modularity, whereby a debtor can restructure only a single class of debt, such as bond indentures, without affecting other debt, such as trade. This is the opposite of chapter 11 of the U.S. Bankruptcy Code’s comprehensive reckoning of all financial stakeholders. This article considers a novel idea: could the scheme be transplanted into the consumer realm? It argues that it could and should. Substantial benefits of more individually …

Aligning Nigeria’S Companies And Allied Matters Act With Restructuring Objectives: A Comparative Analysis Using Key Areas Of Interest In Canada’S Insolvency Regime, Unyime Anieti Akpan

Master of Laws Research Papers Repository

Despite the commendable inclusion of restructuring options in Nigeria’s Companies and Allied Matters Act 2020 (“CAMA 2020”), there are still some issues to be addressed in order to fully align CAMA’s restructuring regimes with its goals. This paper undertakes a comparative analysis of the CAMA and the relevant Canadian laws in this respect (particularly the Companies’ Creditors Arrangement Act (“CCAA”) which are aimed at restructuring insolvent corporations. Given the broad nature of a general comparison of insolvency regimes, the approach of this research will be to highlight some key areas of interest under both the CAMA …

Federal Data Privacy Regulation: Do Not Expect An American Gdpr, Matt Buckley

DePaul Business & Commercial Law Journal

No abstract provided.

Welcome Address, Lauren Mckenzie

DePaul Business & Commercial Law Journal

No abstract provided.

Front Matter

DePaul Business & Commercial Law Journal

No abstract provided.

Discharge Discrimination, Nicole Langston

Vanderbilt Law School Faculty Publications

Although the Bankruptcy Code is facially neutral, the consumer bankruptcy discharge provisions produce anomalies that run counter to bankruptcy's internal principles of not forgiving debt that is based on misconduct or that implicates a public policy concern. For example, the discharge provisions allow some individuals to discharge debt that stems from civil rights violations or tortious discrimination. In contrast, the Bankruptcy Code precludes some debtors from debt relief based on narrow views of misconduct or misconceptions about moral hazards. These individuals who file for bankruptcy owe debts that generally cannot be forgiven, like civil and criminal fees and fines and …

Finding A Port In The Storm: Constitutional Claims Find Protection Under The Fifth Amendment In Municipal Bankruptcy In In Re Financial Oversight & Management Board, Mark Lammey

Villanova Law Review

No abstract provided.

Interest Rates, Venture Capital, And Financial Stability, Hilary J. Allen

Articles in Law Reviews & Other Academic Journals

Following several prominent bank failures and as central banks continue to tighten interest rates to fight inflation, there is increasing interest in the relationship between monetary policy and financial stability. This Article illuminates one path through which the prolonged period of low interest rates from 2009-2021 has impacted financial stability: it traces how yield-seeking behavior in the wake of the Global Financial Crisis and Covid pandemic led to a bubble in the venture capital industry, which in turn spawned a crypto bubble as well as a run on the VC-favored Silicon Valley Bank. This Article uses this narrative to illustrate …