Law Commons^™

The Lease Of All Evils: How A Middle-Ground Approach Can Resolve The Bankruptcy Code Conflict Between Section 363(F) Sales And Section 365(H) Lessee Protections, Kate Christensen

Fordham Journal of Corporate & Financial Law

The Fifth Circuit’s recent decision in In re Royal St. Bistro, LLC has awakened an unsettled issue in the Bankruptcy Code that has divided the bankruptcy community for over two decades. The question examined by the Fifth Circuit was whether a non-debtor lessee with a right to continued possession through section 365(h) of the Bankruptcy Code loses this right if the debtor-lessor can sell its property “free and clear” under section 363(f). While early decisions held that section 365(h) always protects lessees against debtors’ free and clear sales, some subsequent decisions created a circuit split by ruling that section 365(h) …

Resolving Corporate Insolvencies In China: The Gap Between Law And Reality, Dr. Zhang Zinian

University of Miami International and Comparative Law Review

This article examines how corporate insolvencies in China, the second largest economy, are handled under the current legislation, the China Enterprise Bankruptcy Law of 2006. Relying on the fresh empirical data arising from the first ten years on the use of China’s three insolvency procedures, reorganization, composition and liquidation, this article reveals the huge gap between the law in the books and the law in action, arguing that the implementation of this law in China perhaps has not achieved the legislative objectives. The constitutional and institutional weaknesses affecting the application of this law are analyzed

The New Value Exception To The Absolute Priority Rule In Chapter 11 Reorganizations: What Should The Rule Be? , Linda J. Rusch

Pepperdine Law Review

No abstract provided.

Mandatory Class Action Lawsuits As A Restructuring Technique, Bryant B. Edwards, Jeffrey A. Herbst, Selina K. Hewitt

Pepperdine Law Review

No abstract provided.

Rehabilitating Bankruptcy Reform, Kara J. Bruce

Nevada Law Journal

No abstract provided.

Assessing The Chrysler Bankruptcy, Mark J. Roe, David Skeel

Michigan Law Review

Chrysler entered and exited bankruptcy in forty-two days, making it one of the fastest major industrial bankruptcies in memory. It entered as a company widely thought to be ripe for liquidation if left on its own, obtained massive funding from the United States Treasury, and exited via a pseudo-sale of its main assets to a new government-funded entity. The unevenness of the compensation to prior creditors raised concerns in capital markets, which we evaluate here. We conclude that the Chrysler bankruptcy cannot be understood as complying with good bankruptcy practice, that it resurrected discredited practices long thought interred in the …

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

Michigan Law Review

In the empirical study we report in Bankruptcy Fire Sales, we compared the recoveries from the going-concern bankruptcy sales of twenty-five large, public companies with the recoveries from the bankruptcy reorganizations of thirty large, public companies. We found that, controlling for the asset size of the company and its presale or pre-reorganization earnings ("EBITDA"), reorganization recoveries were more than double sale recovenes. We are honored that Professor James J. White has chosen to comment on our study. White is an eloquent defender of the status quo, pulls no punches, and always has something interesting to say. Bankruptcy Noir is …

Individual Chapter 11 Reorganizations: Big Problems With The New "Big" Chapter 13, Robert J. Landry Iii

University of Arkansas at Little Rock Law Review

No abstract provided.

Chapter 11 Reorganization Cases And The Delaware Myth, Harvey R. Miller

Vanderbilt Law Review

Since the mid-1990s, there has been a spirited debate concerning the emergence of the United States Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") as the virtual Chapter 11 capital for distressed debtor corporations. The "Delawarization" of corporate reorganizations under title 11 of the United States Code (the "Bankruptcy Code"), which occurred during the 1990s as a result of the migration of Chapter 11 cases of large enterprises from other venues to Delaware, has provoked a stream of academic articles debating the consequences of Delaware's emergence. Armed with statistics purporting to demonstrate a high rate of recidivism …

The Failure Of Public Company Bankruptcies In Delaware And New York: Empirical Evidence Of A "Race To The Bottom", Lynn M. Lopucki, Sara D. Kalin

Vanderbilt Law Review

Commentators sometimes recognize Delaware's preeminence in corporate law, but they almost invariably treat Delaware's recent popularity as a bankruptcy venue choice as raising entirely different issues. In fact, the two are integrally related. Specifically, just as the efforts of Delaware and other states to attract corporations--a process often referred to as "charter competition'-has induced Delaware to regulate corporate law in a generally efficient manner, the same forces will have a beneficial effect on Delaware's bankruptcy judges

. -Professor David Skeet'

Financial Failure In The Hospitality Industry, Edward M. Tavlin, Elisa S. Moncarz, Deb Dumont

Hospitality Review

The hospitality industry (especially the restaurant segment) has a historically high rate of financial failures. Yet, financial failure in the industry has not received the attention it deserves. In this article, the authors identify basic reasons underlying failed ideas while presenting a study of several hospitality chains that have experienced varying degrees of financial failure. The characteristics and pitfalls of these companies provide the necessary groundwork to explore major lessons to be learned which should aid hospitality management to aviod future business failures.

The Discharge Of Partnerships And Partners Under The Bankruptcy Code, Frank R. Kennedy

Vanderbilt Law Review

The provisions of the Bankruptcy Act applicable to partnerships, partners, and their creditors were cryptic. Significant changes in these provisions made by the Bankruptcy Reform Act of 1978 have not appreciably diminished the difficulties of administering the estates of partnerships and partners in cases under Title 11 of the United States Code. The rules governing discharge of partnerships and partners and the dischargeability of their debts have given rise to a number of special problems under both the Bankruptcy Act and the Bankruptcy Reform Act. This Article undertakes to identify and analyze these problems and to suggest solutions.

Inflation And The Concept Of Reorganization Value, Elizabeth J. Schwartz

Vanderbilt Law Review

This Recent Development examines the validity of this formula, with and without allowances for future inflation, as a tool for valuing the stock to be distributed to creditors in corporate re-organization proceedings. This discussion considers the valuation method both under Chapter 11 of the new Bankruptcy Code and under Chapter X of the now superseded Bankruptcy Act, which is still effective in many pending cases. The Recent Development describes the purpose and effects of equity share valuations in bankruptcy reorganization proceedings, compares the methods that have been used by the courts with methods used by investors to ascertain the investment …

Municipal Bankruptcy: The Need For An Expanded Chapter Ix, Daniel J. Goldberg

University of Michigan Journal of Law Reform

New York City's default crisis in 1975 presented to Congress and the nation the possibility of a major municipality's entering the federal bankruptcy court. Chapter IX of the Bankruptcy Act, as recently amended by Congress, provides the exclusive remedy by which local governmental units may obtain relief from burdensome indebtedness. Unlike certain other chapters of the Bankruptcy Act, Chapter IX is limited to a voluntary composition or extension of indebtedness. In recent years municipalities have developed complex systems of financing, while experiencing unprecedented expansion in the services which they must provide. Accordingly, a mere composition of municipal indebtedness is no …

Federal Priority Statute Gives United States Nontax Priority In Chapter X Corporate Reorganizations-United States V. Anderson, Michigan Law Review

Michigan Law Review

In a proceeding under Chapter X of the Bankruptcy Act for the reorganization of an insolvent corporation, the United States claimed first priority for nontax debts under the federal priority statute, Revised Statutes § 3466. The trustee of the corporation contested the claim to priority on the ground that section 199 of Chapter X, which in effect provides the United States in Chapter X proceedings with priority only for tax and customs claims, is exclusive and therefore R.S. § 3466 does not apply. The district court denied the claim to priority. On appeal to the Court of Appeals for the …

Federal Procedure-Applicability Of State Decisional Law Interpreting State Statutes Of Limitations Under Section 11 (E) Of The Bankruptcy Act, Charles E. Oldfather S.Ed

Michigan Law Review

Plaintiff is the trustee in bankruptcy of a Virginia corporation whose petition for reorganization under chapter X of the Bankruptcy Act was approved by a Virginia federal district court in 1942. Plaintiff filed this action in a New York federal district court under section 11 (e) of the Bankruptcy Act against defendant, the principal stockholder, and others for breach of fiduciary duty. The alleged breaches of duty occurred in 1927 and 1929. The defendant pleaded the New York statute of limitations and contended that it should be applied as interpreted by New York decisions, which hold that the statute begins …

Bankruptcy-Corporate Reorganization-Power Of Court To Order Interim Payments While Petition Is Pending Under Chapter X Of Bankruptcy Act, William F. Snyder S.Ed.

Michigan Law Review

A petition for reorganization was filed, pursuant to Chapter X of the Chandler Act, October 3, 1947, which was adjudged on the same day to be in good faith and within the terms of the act. The corporation was clearly solvent, in the sense that its assets exceeded its liabilities, but needed financial adjustment to meet the principal on outstanding income notes due the following June. Thereafter, and before a plan was approved, the court entered an order directing the trustee of the debtor to pay 6% to the holders of the first mortgage bonds as an interim distribution to …

Bankruptcy-Effect Of Rule Of Erie Railroad V. Tompkins On Priorities In Federal Bankruptcy Proceedings, Michigan Law Review

Michigan Law Review

A company engaged in the mortgage-guaranty business became bankrupt, the respondent being the successor company resulting from reorganization proceedings under section 77B of the Bankruptcy Act. The original company had loaned money secured by a bond and mortgage and then sold certificates to the public representing undivided shares in the mortgage, the certificates being guaranteed by the same company. The mortgagor having defaulted, the controversy in the principal case arose because the now bankrupt company had before bankruptcy repurchased two of the certificates, acquired title to a third, and held the balance of the loan for which no certificates had …

Bankruptcy - Corporate Reorganization - Section 77b - Chapter X Of The Chandler Act - Boyd Case Rule, Edmund O'Hare

Michigan Law Review

A subsidiary of the defendant corporation filed a reorganization petition under Section 77 B of the Bankruptcy Act and defendant presented a claim of over nine million dollars as a creditor, the claim being grounded upon moneys paid by defendant to the subsidiary for its benefit, management and supervision fees, rental and interest charges, and declared but unpaid dividends. Defendant owned about ninety-eight per cent of the common stock of the subsidiary. As the result of objections by the trustee and preferred stockholders of the subsidiary, defendant's claim was compromised at five million dollars. The reorganization plan provided in part …

Corporations - Modification Provisions Of Corporate Mortgages And Trust Indentures, Charles H. Haines Jr.

Michigan Law Review

As early as the late 1800's it was not uncommon to find included in corporate mortgages and trust indentures provisions looking to the modification of the rights of the bondholders by action of a given majority of such holders. Ordinarily the power conferred could not be exercised by the holders of less than seventy-five per cent in value of the outstanding bonds; the modification authorized might be the alteration of security rights, the deferment of payments of interest or principal, the reduction of interest, or even the reduction of the debt. Inasmuch as the same equitable doctrines limit their use, …

Corporations-Right Of Officers To Purchase Claims Against The Corporation And Enforce Them At Their Face Value

Michigan Law Review

Defendant was enlisted by one of the insolvent corporation's creditors, a holder of preferred stocks and debentures, to buy up landlord's claims against the corporation. These claims were large in number and amounts and were crucial elements in a successful reorganization. By means of the stock vote of the creditor, defendant was elected director of the corporation and remained as such for one month, though during this time he was not active in acquiring landlord's claims. Upon resignation as director, defendant was successful in buying up most of the landlord's claims, it being a fair inference from the facts that …

Corporations-Right Of Stockholder To Inspect Stock Book Of Bankrupt Corporation Under Section 77b

Michigan Law Review

Petitioner was the controlling stockholder of B corporation, which had its petition for reorganization under Section 77B of the National Bankruptcy Act approved. Being dissatisfied with the present board, he applied to the district court for an order directing the trustees of B to permit him to examine the stock book for the purpose of securing names of stockholders in order to call a meeting to elect a new board. Application was denied by the district court on the ground that calling a meeting would impede rapidity of reorganization. On appeal, held, application should have been granted, for Section …

Bankruptcy-Receivership As Basis For Action Under Section 77b

Michigan Law Review

The Bankruptcy Act, Section 77B (a), provides that creditors with more than a fixed minimum of claims may file a petition proposing a corporate reorganization and stating "that such corporation is insolvent or unable to meet its debts as they mature and, if a prior proceeding in bankruptcy or equity receivership is not pending, that it has committed an act of bankruptcy within four months . . . . " On a petition which alleged no prior proceeding in bankruptcy nor any act of bankruptcy within four months but did allege the appointment of receivers in an action in the …

Bankruptcy- Preferred Stockholders As Creditors For Accrued Dividends Under Section 77b Of The Bankruptcy Act

Michigan Law Review

Preferred stockholders were "beguiled" into purchasing their stock, and paid, as part of the subscription price, for accrued dividends at the rate of 6 per cent per annum from June 1, 1933, to the date of their respective subscriptions, upon the "virtual promise of refund" on December 1, 1933, the next dividend date. No dividend was declared or paid. Such stockholders seek to file a petition for the reorganization of the corporation under Section 77B of the Bankruptcy Act as "creditors" within the meaning of the word as employed in that section. Held, they are "creditors" within the meaning …

Corporations-Section 77b Of The Bankruptcy Act-To What Corporations It Applies

Michigan Law Review

Creditors of a title and mortgage company which had gone into receiver's hands petitioned for a reorganization of the company under Section 77B of the Bankruptcy Act. Held, that the company was an insurance corporation. Insurance corporations are not amenable to Section 77B. Petition for reorganization dismissed. In re New York Title and Mortgage Co., (D. C. N. Y. 1934) 9 F. Supp. 319.

Constitutional Law--Mortgages--Frazier-Lemke Act

Michigan Law Review

In 1922 and 1924 appellee mortgaged property worth $18,000 to secure a loan of $9,000 from appellant which was to be repaid in installments over a period of thirty-four years. Default being made on the covenants in the mortgage, the mortgagee declared the full amount due and brought a suit to foreclose. Proceedings were stayed when the appellee sought relief under Section 75 of the Bankruptcy Act, but he was unable to obtain the requisite majority in number and amount to the composition proposed. The state court entered a foreclosure judgment and ordered a sale. The mortgagor then sought relief …

Corporate Reorganization-Section 77 Of The Bankruptcy Act--Power Of Court To Enjoin Sale Of Bonds Pledged As Collateral

Michigan Law Review

The recent Chicago, Rock Island case raised an interesting problem under Section 77 of the Bankruptcy Act. The Chicago, Rock Island as parent railroad of a system extending into one-fourth of the states, had pledged large blocks of its own mortgage bonds and those of its subsidiaries, as security for loans made to it by the Reconstruction Finance Corporation and some Chicago, New York, and St. Louis banks, under an agreement whereby the pledgees were given a power of private sale, without notice, upon set contingencies. In addition to the above it had previously pledged with trustees as security for …

The Rights Of Creditors In Reorganization, Robert W. Crasher

Indiana Law Journal

No abstract provided.