Law Commons^™

Ending The Nonsense: The In Pari Delicto Doctrine Has Nothing To Do With What Is § 541 Property Of The Bankruptcy Estate, Jeffrey Davis

Jeffrey Davis

The recent wave of disregard for corporate fiduciary responsibilities has provided numerous opportunities for courts to consider whether the corporations bankrupted by the unlawful acts of their principals should be prohibited by the in pari delicto doctrine from pursuing liability claims against third parties who contributed to the harm. In an array of recent cases, courts have reluctantly and apologetically, yet uniformly, permitted third parties who contributed to the demise of these corporations to escape liability because they felt § 541 of the Bankruptcy Code (the "Code") left them no other choice. Section 541 provides that the filing of a …

Florida's Beefed-Up Assignment For The Benefit Of Creditors As An Alternative To Bankruptcy, Jeffrey Davis

Jeffrey Davis

Two new corporate clients have been referred to you. The owners of both corporations have consulted lawyers about their struggling businesses and now seek second opinions. The first was advised by its attorney to file a Chapter 7 bankruptcy petition, the second was advised to file a Chapter 11 petition. You think both should consider an assignment for the benefit of creditors. Why? Stated simply, an assignment for the benefit of creditors, or an ABC, is normally much simpler and almost always less expensive than a comparable bankruptcy proceeding.' The substantial savings in expense results in larger payouts to both …

The Intersection Of Tax And Bankruptcy: The Mccoy Rule, John Ferguson

John Ferguson

No abstract provided.

Veiled Egos: Alter Ego, Veil-Piercing, And Sections 362(A) And 727(A), Amir Shachmurove

Amir Shachmurove

No abstract provided.

The Orderly Liquidation Authority: Fanatical Or Familiar? Idealistic Or Unrealistic?, Stephanie P. Massman

Stephanie P Massman

The systemic financial crisis of 2008 spurred the failure of numerous financial and non-financial entities. Regulators addressed each of these failures on an ad hoc ex-post basis, granting multiple bailouts in various forms. The refusal to extend these bailouts to one firm, Lehman Brothers, however, caused further panic and contagion throughout the already unstable market as one of the largest financial institutions of the U.S. underwent an extremely lengthy and value-destructive Chapter 11 bankruptcy. Criticism surrounding not only the bailouts, but also the decision to allow Lehman to fail under the Bankruptcy Code, led to the inclusion of the Orderly …

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 volume and …

Reward The Stalking Horse Or Preserve The Estate: Determining The Appropriate Standard Of Review For Awarding Break-Up Fees In § 363 Sales, Zachary Frimet

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 …

Litigating For The Future Of Public Pensions, Paul 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 Saga Of Income From Income-Producing Collateral Treatment In Bankruptcy For Undersecured Creditors, Ian D. Ghrist

Ian D. Ghrist

Abstract

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 subtraction method, …

Unquantifiable Wrongs, Incomparable Remedies: Post-Petition Enforcement Of Noncompetition Agreements, Amir Shachmurove

Amir Shachmurove

No abstract provided.

The Value Of Soft Variables In Corporate Reorganizations, Michelle M. Harner

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 …

Bankruptcy Rule 7004(H) After Espinosa: A Timely Distinction Between Constitutional And Statutory Service, Amir Shachmurove

Amir Shachmurove

In a contested matter or adversary proceeding, Federal Rule of Bankruptcy Procedure 7004(h) sets forth the requisites for service on an “insured depository institution.” Subject to three exceptions, a motion or complaint must be served by certified mail on an officer of these statutorily defined institutions. In a Chapter 13 case, a debtor may attempt to strip-off a wholly unsecured junior mortgage via a motion under § 506(a) pursuant to Rule 3012, a plan provision in accordance with § 1322(b)(2), an adversary proceeding, or some combination. This article focuses on how a debtor’s failure to satisfy Rule 7004(h) affects the …

Should § 707(B) Apply In Chapter 7 Cases Converted From Chapter 13?, Anna Haugen, James Eidson, Amir Shachmurove

Amir Shachmurove

No abstract provided.

Exploring Chapter 11 Reform: Corporate And Financial Institution Insolvencies; Treatment Of Derivatives -, Michelle Harner

Michelle M. Harner

No abstract provided.

Honesty Is The Best Policy: Why Good Faith Should Be Required In Chapter 7 Bankruptcies Under § 707(A), Justin Forcier

Justin Forcier

A circuit split exists in today’s bankruptcy courts over whether § 707(a) of the Code requires a debtor to file his Chapter 7 petition in good faith. Some courts have failed to recognize that allowing bad faith petitions to move forward does not align with the spirit of the bankruptcy system and creates a greater and unnecessary burden on those courts and creditors. Therefore, courts should find there is a good-faith requirement in the Code under § 707(a), because finding so will promote continuity, allow those debtors who did file in good faith to receive a faster resolution, and promote …

The Privilege Against Self-Incrimination In Bankruptcy And The Plight Of The Debtor, Timothy R. Tarvin

Timothy R Tarvin