The Value Of Soft Variables In Corporate Reorganizations, 2015 University of Maryland Francis King Carey School of Law
The Value Of Soft Variables In Corporate Reorganizations, Michelle M. Harner
When a company is worth more as a going concern than on a liquidation basis, what creates that additional value? Is it the people, management decisions, the simple synergies of the operating business, or some combination of these types of soft variables? And perhaps more importantly, who owns or has an interest in these soft variables? This article explores these questions under existing legal doctrine and practice norms. Specifically, it discusses the characterization of soft variables under applicable law and in financing documents, and it surveys related judicial decisions. It also considers the overarching public policy and Constitutional implications of ...
When Is A Dog’S Tail Not A Leg?: A Property-Based Methodology For Distinguishing Sales Of Receivables From Security Interests That Secure An Obligation, 2014 University of Pennsylvania Law School
When Is A Dog’S Tail Not A Leg?: A Property-Based Methodology For Distinguishing Sales Of Receivables From Security Interests That Secure An Obligation, Steven L. Harris, Charles W. Mooney Jr.
There are two principal ways in which a firm that is owed money payable in the future but needs the money now may use its rights to payment (“receivables”) to obtain the needed financing. It might sell its receivables, or it might borrow and use the receivables as collateral to secure the loan. Different legal consequences follow depending on whether the transaction is a true sale or is a security interest that secures an obligation (a “SISO”).
These legal consequences are particularly salient when the firm enters bankruptcy. If the transaction is a sale, then the buyer can collect the ...
Sherlock’S Admonition: Vindicatory Contempts As Criminal Actions For Purposes Of 11 U.S.C. § 362(B)(1), Amir Shachmurove
No abstract provided.
Against Regulatory Displacement: An Institutional Analysis Of Financial Crises, 2014 SelectedWorks
Against Regulatory Displacement: An Institutional Analysis Of Financial Crises, Jonathan C. Lipson
Jonathan C. Lipson
This paper uses “institutional analysis”—the study of the relative capacities of markets, courts, and regulators—to make three claims about financial crises.
First, financial crises are increasingly a problem of “regulatory displacement.” Through the ad hoc rescues of 2008 and the Dodd-Frank reforms of 2010, regulators displace market and judicial processes that ordinarily prevent financial distress from becoming financial crises. Because regulators are vulnerable to capture by large financial services firms, however, they cannot address the pathologies that create crises: market concentration and complexity. Indeed, regulators may inadvertently aggravate these conditions through resolution tactics that consolidate firms, and the ...
The (Il)Legitimacy Of Bankruptcies For The Benefit Of Secured Creditors, 2014 University of Pennsylvania Law School
The (Il)Legitimacy Of Bankruptcies For The Benefit Of Secured Creditors, Charles W. Mooney Jr.
This paper explores the legitimacy—or illegitimacy—of filing and maintaining a case under the Bankruptcy Code when the sole or principal beneficiary or beneficiaries of the case would be a secured creditor or secured creditors. In the situation posited here, the application of the usual distributional priority rules would not produce any distribution for the general, unsecured creditors of the debtor. In the prototypical case virtually all of the assets of the debtor would be subject to secured claims securing obligations that exceed the value of the collateral, i.e., the secured creditor would be undersecured and there would ...
Reward The Stalking Horse Or Preserve The Estate: Determining The Appropriate Standard Of Review For Awarding Break-Up Fees In § 363 Sales, Zachary Frimet
Following the surge of bankruptcies in the wake of the Great Recession, a growing and somewhat controversial trend has emerged whereby companies seeking to purchase a debtor’s assets in bankruptcy frequently make use of Section 363 of the United States Bankruptcy Code (“§ 363”). In general, § 363 sales are accomplished via public auction. This aspect of § 363 exposes initial bidders, known in bankruptcy as “stalking horses bidders”, to the risk that they will commit time and resources in pursuit of the acquisition and yet fail to succeed as the prevailing bidder. To hedge against this risk, stalking horse bidders frequently ...
Litigating For The Future Of Public Pensions, 2014 SelectedWorks
Litigating For The Future Of Public Pensions, Paul M. Secunda
Paul M. Secunda
Public pensions are horribly unfunded, millions of public employees are being forced to make greater contributions to their pensions, retirees are being forced to take benefit cuts, retirement ages and service requirements are being increased, and the list goes on and on. These alarming developments involve all level of American government, from the recent move to require new federal employees to contribute more to their pensions, to the significant underfunding of state and local public pension funds across the country, to the sad spectacle of the Detroit municipal bankruptcy where the plight of public pensions plays a leading role in ...
The New Corporate Web, 2014 SelectedWorks
The New Corporate Web, Anthony J. Casey
Anthony J. Casey
Business firms often separate commonly owned assets into distinct legal entities. The assets can then be financed in discrete bundles to reduce creditors’ monitoring and enforcement costs. Law-and-economics literature has viewed these legal partitions as either all or nothing. That view is flawed and has led the analysis of corporate groups astray.
In reality, firms have developed sophisticated legal mechanisms that partition assets across some dimensions and not others. The result is a complex web of interconnected affiliates. For example, an asset that is placed in one legal entity may serve as collateral guaranteeing the debts of another legal entity ...
What Is A Lien? Lessons From Municipal Bankruptcy, 2014 University of Pennsylvania Law School
What Is A Lien? Lessons From Municipal Bankruptcy, David A. Skeel Jr.
From the outset of Detroit’s bankruptcy, an unlikely set of issues kept coming up: What exactly is a lien? Who has a property interest or its equivalent in bankruptcy? Did general obligation bondholders have special status, due to Detroit’s promise to use its “full faith and credit” for repayment? What about Detroit’s pension beneficiaries, who could point to a provision in the Michigan Constitution stating that accrued pension benefits cannot be diminished or impaired. In this Article, I explore these and related issues that have arisen in Detroit and other recent municipal bankruptcy cases.
Part I of ...
The Saga Of Income From Income-Producing Collateral Treatment In Bankruptcy For Undersecured Creditors, Ian D. Ghrist
Ian D. Ghrist
Who gets the income from income-producing collateral during bankruptcy—the debtor or the undersecured creditor? Throughout the history of bankruptcy law in America, this question has not had a bright-line answer. It is one of those indelible questions whose answer lies even to this day within the equitable power of courts of equity. In 2014, the First Circuit looked at this question and adopted the Fifth Circuit’s “flexible approach.”
With the flexible approach growing in popularity, the lower courts’ tendency to adopt rigid valuation methodologies should fade. Instead of taking positions on either the addition method or the ...
Moving Beyond Marriage: A Proposed Unit Of Presumed Economic Interdependence For Joint Filing Purposes In Bankruptcy And In Tax, Heather V. Graham
Pace Law Review
In order to promote both equality and efficiency, this Comment proposes that individuals should have the opportunity to file jointly for tax and bankruptcy purposes when they have a relationship predicated upon economic interdependence, as opposed to basing the opportunity to file jointly upon marital status. Part I of this Comment will briefly discuss the history of marriage in the United States. In particular, Part I will discuss the role that the government has had in promoting and regulating marriage and how the treatment of married persons operates to the exclusion of the unmarried. Parts II and III of this ...
When Should Bankruptcy Be An Option (For People, Places, Or Things)?, 2014 College of William & Mary Law School
When Should Bankruptcy Be An Option (For People, Places, Or Things)?, David A. Skeel Jr.
William & Mary Law Review
When many people think about bankruptcy, they have a simple left-to-right spectrum of possibilities in mind. The spectrum starts with personal bankruptcy, moves next to corporations and other businesses, and then to municipalities, states, and finally countries. We assume that bankruptcy makes the most sense for individuals; that it makes a great deal of sense for corporations; that it is plausible but a little more suspect for cities; that it would be quite odd for states; and that bankruptcy is unimaginable for a country.
In this Article, I argue that the left-to-right spectrum is sensible but mistaken. After defining “bankruptcy ...
Peticion De Quiebra Directa Por El Acreedor, 2014 SelectedWorks
Peticion De Quiebra Directa Por El Acreedor, Carlos Molina Sandoval
Carlos Molina Sandoval
El pedido de quiebra por el acreedor es una vía sumaria, rápida, en la cual el juez, sin que medie una amplia etapa cognitiva, determina la acreditación de ciertos supuestos y procede a la declaración de la quiebra -y a la posterior orden de subasta de los bienes que integran la masa falencial-. Pero esta sumariedad procesal no tiene entidad suficiente para sustentar la naturaleza ejecutiva del juicio de quiebra.
Chapter 11 With A Happy Ending: The Six Flags Bankruptcy, 2014 University of Tennessee, Knoxville
Chapter 11 With A Happy Ending: The Six Flags Bankruptcy, John Capps, Lauren Sherrell
Chapter 11 Bankruptcy Case Studies
This paper discusses the bankruptcy and restructuring that Premier Parks (“Six Flags”) recently underwent in order to return the company to profitability. The discussion begins with a summary of the company’s history and an introduction to the key players in the restructuring process, including the relevant circumstances and management figures responsible for the considerable financial problems that brought Six Flags to make a Chapter 11 filing. Contextually significant factors such as economic and industry conditions, stakeholder motivations, and media occurrences that were particularly relevant are examined as well. The paper provides an account of the bankruptcy proceedings from the ...
Unstayed Non-Default State Judgments And The Bona Fide Dispute Language, 2014 SelectedWorks
Unstayed Non-Default State Judgments And The Bona Fide Dispute Language, William Burton
Bocconi Legal Papers
This Note begins by discussing involuntary bankruptcy generally, the 1984 amendment made to the code affecting this issue, the relative legislative history, and the development of a definition for bona fide dispute. Second, both approaches for dealing with unstayed non-default state judgments as they relate to the requirements of involuntary bankruptcy will be examined. Third, this Note investigates the persuasiveness and negativities behind both approaches. Finally, in an attempt to resolve the ambiguity and solidify Delaware and Pennsylvania courts and the Circuits courts themselves, a suggestion will be made that the Third Circuit, and eventually the Supreme Court, adopt the ...
Municipal Bankruptcy And Public Pensions: Detroit's Eligibility For Chapter 9 Relief And Legal Restraints On The City's Actions As A Debtor, Jackson T. Garvey
Notre Dame Law Review
This Note will seek to address the constitutional and statutory issues raised in the early stages of Detroit’s bankruptcy. Part I will briefly address how Detroit reached the point where municipal bankruptcy became legally possible and politically attractive. It will examine population trends in the city, changes in the character of Detroit’s major industries, and the deterioration of city services.
Part II will provide background information about the history of municipal bankruptcy in America and the constitutional challenges that it has faced. It will attempt to give a base from which to examine the major issues raised by ...
In Re Fairpoint Communications, Inc., 2014 University of Tennessee, Knoxville
In Re Fairpoint Communications, Inc., Patrick Green, Todd Blakeley Skelton
Chapter 11 Bankruptcy Case Studies
FairPoint Communications, Inc. (the “Company”) and its subsidiaries (collectively, “FairPoint”) provide communications services to rural and small business customers in eighteen states. As of December 2009, FairPoint had approximately 1.7 million “access line equivalents (including voice access lines and high-speed data lines, which include digital subscriber lines, or DSL, wireless broadband and cable modem) in service.” Challenges presented by industry competition and innovation, the integration of acquired operations, adverse economic conditions, and changes in customer usage and spending habits contributed to FairPoint and its subsidiaries and affiliates’ filing a voluntary Chapter 11 bankruptcy petition on October 26 ...
Borders Group, Inc.’S Final Chapter: How A Bookstore Giant Failed In The Digital Age, 2014 University of Tennessee, Knoxville
Borders Group, Inc.’S Final Chapter: How A Bookstore Giant Failed In The Digital Age, Will Hooper, Mary Katherine Rawls
Chapter 11 Bankruptcy Case Studies
In 1995, Borders Group, Inc. was the second largest bookstore in America, boasting massive superstores that housed more titles of books, DVDs, and videos than any of its competitors. Despite its early strength and success, a series of unfortunate business decisions and a general failure to keep up with the times sent Borders spiraling down a path to financial ruin. This paper documents the birth, rapid growth, and eventual downfall of Borders Bookstores through the lens of its Chapter 11 Bankruptcy.
Keeping Current: The Trustee Fought Law (With Equity) And Law Won: The U.S. Supreme Court’S Recent Decision In Law V. Siegel, Juliet M. Moringiello
Juliet M Moringiello
No abstract provided.
Taxing Bankrupts, 2014 Boston College Law School
Taxing Bankrupts, Shu-Yi Oei
Boston College Law Review
When a debtor goes bankrupt and limited assets have to be divided between competing creditors, should unpaid taxes owed to the government be paid before the debts owed to other creditors? This Article defends the notion that some tax debts should be awarded priority. Insofar as bankruptcy protection transfers the risk of financial distress from a debtor to her creditors, the tax priority debate should be understood as a fight about how much debtor default risk the government should have to assume relative to other creditors. This Article argues that the government’s share of debtor default risk should be ...