Law Commons^™

The Bankruptcy Of Golfers' Warehouse, Inc.: A Lesson In How To Sell A Business In Chapter 11, Briton Collins, Will Smith, David Choi

David Y Choi

No abstract provided.

Bankruptcy Federalism: A Doctrine Askew, Margaret Howard

Lyman P. Q. Johnson

No abstract provided.

The Unlucky Penny: How $0.01 In Collateral Value Can Limit The Debtor's Ability To Strip Off A Junior Mortgage In A Chapter 7 Bankruptcy Proceeding, Keri Mahoney

Touro Law Review

No abstract provided.

Breaking Bankruptcy Priority: How Rent-Seeking Upends The Creditors' Bargain, Frederick Tung, Mark J. Roe

Faculty Scholarship

Bankruptcy reallocates value in a faltering firm. The bankruptcy apparatus eliminates some claims and alters others, leaving a reduced set of claims to match the firm’s diminished capacity to pay. This restructuring is done according to statutory and agreed-to contractual priorities, so that lower-ranking claims are eliminated first and higher ranking ones are preserved to the extent possible. Bankruptcy scholarship has long conceptualized this reallocation as a hypothetical bargain among creditors: creditors agree in advance that if the firm falters, value will be reallocated according to a fixed set of predetermined rules and contracts. In any given reorganization case, creditors …

Bankruptcy And Economic Recovery, Thomas H. Jackson, David A. Skeel Jr.

All Faculty Scholarship

To measure economic growth or recovery, one traditionally looks to metrics such as the unemployment rate and the growth in GDP. And in terms of figuring out institutional policies that will stimulate economic growth, the focus most often is on policies that encourage investment, entrepreneurial enterprises, and reward risk-taking with appropriate returns. Bankruptcy academics that we are, we tend to add our own area of expertise to this stable— with the firm belief that thinking critically about bankruptcy policy is an important element of any set of institutions designed to speed economic recovery. In this paper, written for a book …

Do Inherited Iras Protect Assets Well?, Lindsey Paige Markus, Assistance From Evan D. Blewett

Evan Blewett

Whether a client has a complex or simple estate plan, failure to properly address a retirement plan (IRA) beneficiary designation may cause havoc. Regardless of what a client’s estate plan may say, the beneficiary designation under the client’s IRA governs.

Hidden In Plain View: The Pension Shield Against Creditors, Patricia E. Dilley

Patricia E Dilley

No abstract provided.

Third Time's The Charm: The Coming Impact Of The Restatement (Third) Restitution And Unjust Enrichment In Bankruptcy, C. Scott Pryor

Pepperdine Law Review

Bankruptcy courts have frequently been characterized as courts of equity. Often this characterization has accompanied unusually relaxed interpretation or application of a provision of the Bankruptcy Code. However, this understanding does not exhaust the meaning of equity in bankruptcy. Historically, equity covered a large range of topics–trusts and estates, injunction, contracts, specific performance, unjust enrichment, restitution, and disgorgement. In addition, equity was not limited to particular remedies. Equity’s remedies certainly included money damages but recognized many more. The law of equity was substantive as well as remedial; it recognized primary rights as well as secondary rights of rectification. Among equity's …

When Opting Out Is The Only Option: Protecting Small Business Debtors In Bankruptcy, Ryan Malone

William & Mary Business Law Review

This Note implores states that have not already done so to opt out of the provisions of the Federal Bankruptcy Code that place explicit limits on the amount a debtor is allowed to exempt from liquidation. By doing so, states will be able to provide debtors who operate their own small business a greater degree of protection from creditors, as those states are entitled to establish their own limit on the value of the tools of a debtor’s trade the debtor may shield in bankruptcy. This Note contends that Congress has evinced an intent within the last decade to restrict …

Hostess Brands, Inc. Bankruptcy, Kathryn K. Ganier, Frederick L. Conrad Iii, Wendy G. Patrick

Chapter 11 Bankruptcy Case Studies

In 1930, the Hostess Corporation[1] began as the Interstate Baking Corporation (IBC). In Kansas City Missouri, flour, wheat, and grain marched from machines as workers placed sliced white squares into Wonder Bread’s iconic yellow, red, and blue packaging.[2]

Hostess grew from its small town beginnings into a large corporation thanks in large part to its innovation in its product lines as well as growth through the acquisition of its competitors. By the end of 2012, “Hostess [was] one of the largest wholesale bakers and distributors of bread and snack cakes in the United States [and] operate[d] 36 bakeries, …

Restructuring The Bankruptcy System: A Strategic Response To Stern V. Marshall, Brook E. Gotberg

Faculty Publications

The Supreme Court's ruling in Stern v. Marshall has signaled a need to alter the bankruptcy courts' jurisdictional structure. In Stern, the Supreme Court ruled that bankruptcy judges, who lack the life tenure and salary protections provided by Article III, cannot issue final rulings in bankruptcy proceedings previously believed to be within their core jurisdiction. In response to the constitutional challenge raised by Stern, and in recognition that bankruptcy court's jurisdictional limits represent a long-standing problem, many argue for a long-term solution: the restructuring of the system to create specialized Article III bankruptcy courts. This article evaluates this proposal in …

Bankruptcy Voting And The Designation Power, Christopher W. Frost

Law Faculty Scholarly Articles

Chapter 11 of the Bankruptcy Code is the only form of bankruptcy that requires winning the consent of the creditor body. Creditors are given the right to vote based on an underlying assumption that they will cast their votes to maximize recovery on their claims. When creditors collectively vote to further these distributional goals, then the estate in turn should realize the maximum value for its assets. "Value maximization" is one of the fundamental goals of chapter 11, and voting in bankruptcy is an important way of achieving that goal.

The problem with these assumptions is that creditors sometimes vote …

Force Out: A Dodgers Bankruptcy, Richard Marrero, Cj Fayton

Chapter 11 Bankruptcy Case Studies

The premise of a chapter 11 bankruptcy is that the business’ going concern value exceeds its liquidation value. It provides the debtor with an opportunity to restructure their debt so that they can pay back their creditors and stay in business.

The debtor’s filing of the bankruptcy petition creates an “automatic stay.”[1] The automatic stay is an injunction that prevents creditors from pursuing legal actions against the debtor and its assets. The automatic stay, however, protects not only the debtor but the creditors as well. In the absence of the automatic stay, creditors would “race to the courthouse” to …

In Re Dewey Ranch Hockey, Llc: The Bankruptcy Of The Phoenix Coyotes, Chris Rowe, Jeff Upshaw

Chapter 11 Bankruptcy Case Studies

While only a small percentage of Chapter 11 bankruptcy filings garner the attention of the American public, a bankruptcy petition involving a “big four” professional sports franchise (NFL, MLB, NBA, NHL) is big news to the American sports world. Perhaps the reason is that few, if any, commercial entities make such a passionate connection with its customers as professional sports teams.

In comparison to the other members of the “big four”, the NHL simply does not have the same level of financial success. Almost half of the 30 NHL franchises lost money in the 2011-2012 season.^[1] Of the nine …

A Blockbuster Failure: How An Outdated Business Model Destroyed A Giant, Todd Davis, John Higgins

Chapter 11 Bankruptcy Case Studies

The rise of the Internet in the 1990s and 2000s rapidly created new markets. Companies like Apple seized on the ability to distribute music online for a lower price than independent record stores, or even large-scale ones like Tower Records could afford, driving record stores to near-extinction.[1] A similar fate has fallen upon the video rental stores. Giants Movie Gallery and Blockbuster, driven by physical rental stores, began struggling to compete with streaming and mailing platforms. Both were driven into bankruptcy because they failed to adapt quickly enough. A series of poor choices by Blockbuster, including passing on the …

Municipalities In Peril: The Abi Guide To Chapter 9, Second Edition Written By: H. Slayton Dabney Jr., Patrick Darby, Daniel G. Egan, Marc A. Levinson, George B. South Iii And Emily J. Tidmore (Abi, 2012), Juliet Moringiello

Juliet M Moringiello

No abstract provided.

The Debtor Class, Kara J. Bruce

Kara J. Bruce

In recent years, individuals seeking bankruptcy protection have encountered an unexpected harm: their lenders have misrepresented the amounts they owe, lost or misapplied their loan payments, and violated clear requirements of bankruptcy law and procedure. Recent investigations of consumer bankruptcy cases reveal widespread abuse of the bankruptcy code, ranging from the filing of unsupported or overinflated proofs of claim to violations of the automatic stay and discharge injunction. Such practices undermine consumer bankruptcy’s central goals to provide consumer debtors a fresh financial start and to achieve the fair treatment of and distribution of assets to creditors. Because many debtors affected …

Securities Class Actions And Bankrupt Companies, James J. Park

Michigan Law Review

Securities class actions are often criticized as wasteful strike suits that target temporary fluctuations in the stock prices of otherwise healthy companies. The securities class actions brought by investors of Enron and WorldCom, companies that fell into bankruptcy in the wake of fraud, resulted in the recovery of billions of dollars in permanent shareholder losses and provide a powerful counterexample to this critique. An issuer's bankruptcy may affect how judges and parties perceive securities class actions and their merits, yet little is known about the subset of cases where the company is bankrupt. This is the first extensive empirical study …

The Manville Corporation Bankruptcy: An Abuse Of The Judicial Process?, Mark Kunkler

Pepperdine Law Review

Federal bankruptcy law offers a refuge to the honest debtor who is unable to pay his creditor's when his debts are due. Here, the twin aims of bankruptcy law, to give the debtor a fresh start and to provide roughly equal treatment for his! Creditors, are laudably accomplished. But what policies support the use of federal bankruptcy law when the "debtor" is in fact solvent and apparently seeks refuge only to escape liability for the products it manufactures? This comment examines the recent filing of the Manville Corporation for Chapter 11 protection under bankruptcy law with this question in mind.

The Dischargeability In Bankruptcy Of Debts For Alimony And Property Settlements Arising From Divorce, John Francis Murphy

Pepperdine Law Review

No abstract provided.

Relative Responsibility In Afdc: Problems Raised By The Noleo Approach—“If At First You Don't Succeed . . .”, Margaret Howard

Margaret Howard

No abstract provided.

Bankruptcy Federalism: A Doctrine Askew , Margaret Howard

Margaret Howard

No abstract provided.

Equipment Lessors And Secured Parties In Bankruptcy: An Argument For Coherence, Margaret Howard

Margaret Howard

No abstract provided.

Bankruptcy Bondage, Margaret Howard

Margaret Howard

Initially, it might seem an affront to the history of slavery in this country to suggest that similar concerns are raised by an expectation that debtors pay their debts. Nevertheless, certain aspects of the Bankruptcy Code present genuine constitutional difficulties under the Thirteenth Amendment. These difficulties have been recognized for several decades, albeit as a matter of speculation. Now, however, un- der the 2005 Amendments to the Bankruptcy Code, this issue is no longer speculative. Under the 2005 Amendments, an individual debtor may be put into a chapter 11 proceeding involuntarily, and re- quired to make payments under a plan …

The Law Of Unintended Consequences, Margaret Howard

Margaret Howard

No abstract provided.

Bankruptcy Federalism: A Doctrine Askew, Margaret Howard

Margaret Howard

No abstract provided.

The Code And The Constitution: Fifth Amendment Limits On The Debtor's Discharge In Bankruptcy, Nicholas A. Franke

Pepperdine Law Review

No abstract provided.

Bankruptcy Trusts, Transparency And The Future Of Asbestos Compensation, S. Todd Brown

Journal Articles

As we enter the fifth decade of asbestos personal injury litigation, much of the debate over its immediate future centers on the operations of bankruptcy trusts and their relationship to the tort system. Roughly 100 companies have entered bankruptcy as a result of their unsustainable asbestos liabilities, and, from these bankruptcies, approximately 60 trusts have been established or are in the process of being established. Some critics contend that the trust system is plagued by fraud and abuse; allowing plaintiffs' lawyers to obtain compensation from the trusts for fraudulent claims and to evade relevant discovery obligations under applicable state law. …

Ring-Fencing, Steven L. Schwarcz

Faculty Scholarship

“Ring-fencing” is often touted as a regulatory solution to problems in banking, finance, public utilities, and insurance. However, both the precise meaning of ring-fencing, as well as the nature of the problems that ring-fencing regulation purports to solve, are ill defined. This article examines the functions and conceptual foundations of ring-fencing. In a regulatory context, the term can best be understood as legally deconstructing a firm in order to more optimally reallocate and reduce risk. So utilized, ring-fencing can help to protect public-benefit activities performed by private-sector firms, as well as to mitigate systemic risk and the too-big-to-fail problem inherent …

Not "Special" Enough For Chapter 7: An Analysis Of The Special Circumstances Provision Of The Bankruptcy Code, Roma Perez

Cleveland State Law Review

The “special circumstances” provision of the Bankruptcy Code, Section 707(b)(2)(B), allows a consumer debtor to rebut the presumption of abuse that is triggered when debtor fails the means test. Congress enacted the statute as a procedural safeguard fully aware that means testing, as set-out in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, could lead to arbitrary results for some debtors. For consumer debtors, the provision functions as a type of escape-hatch. It allows a debtor to avoid dismissal of his Chapter 7 bankruptcy case by introducing documentary evidence that the means test calculation, and its attendant income …