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Articles 1 - 30 of 66
Full-Text Articles in Law
Bankruptcy & The Underwater Home: A Case For Real Property Redemption, David Sheinfeld
Bankruptcy & The Underwater Home: A Case For Real Property Redemption, David Sheinfeld
Michigan Business & Entrepreneurial Law Review
Chapter 7 of the U.S. Bankruptcy Code exists to satisfy the claims of creditors and preserve an economic “fresh start” for the debtor after bankruptcy. In exchange for surrendering her property to the trustee to have it monetized (i.e., sold), the debtor receives a discharge of her debts and an injunction against future creditor in personam actions to recover them. However, the in personam injunction is insufficient to protect consumer debtors who are in default on mortgages encumbering underwater homes because the creditor’s in rem rights remain; after the conclusion of the case, the creditor can continue foreclosure proceedings, which …
A Sea Change In Creditor Priorities, Kristen Van De Biezenbos
A Sea Change In Creditor Priorities, Kristen Van De Biezenbos
University of Michigan Journal of Law Reform
This Article argues that the operation of maritime law undermines a primary justification for creditor priorities under U.S. law. Under current law, when a debtor becomes insolvent, its secured creditors will be paid the full amount of their debt to the extent of their security interest, even if that leaves nothing to pay unsecured creditors. This is controversial with respect to involuntary unsecured creditors, particularly those with tort claims against the debtor. Defenders of this scheme of priorities have argued that allowing greater priority to involuntary creditors would hinder the availability or increase the cost of credit. However, involuntary creditors …
A Capital Market, Corporate Law Approach To Creditor Conduct, Mark J. Roe, Frederico Cenzi Venezze
A Capital Market, Corporate Law Approach To Creditor Conduct, Mark J. Roe, Frederico Cenzi Venezze
Michigan Law Review
The problem of creditor conduct in a distressed firm—-for which policymakers ought to have the distressed firm’s economically sensible repositioning as a central goal—-has vexed courts for decades. Because courts have not come to coherent, stable doctrine to regulate creditor behavior and because they do not focus on building doctrinal structures that would facilitate the sensible repositioning of the distressed firm, social costs arise and those costs may be substantial. One can easily see why developing a good rule here has been hard to achieve: A rule that facilitates creditor intervention in the debtor’s operations beyond the creditor’s ordinary collection …
Undocumented Debtors, Chrystin Ondersma
Undocumented Debtors, Chrystin Ondersma
University of Michigan Journal of Law Reform
Undocumented immigrants in financial distress are barred from seeking many forms of assistance. Bankruptcy is one tool that is, in theory, available to undocumented debtors because legal status is not a prerequisite to bankruptcy relief. This Article explores undocumented debtors' interactions with the bankruptcy system. Undocumented debtors face both formal and informal barriers to bankruptcy filing, including fear of deportation, misinformation, and the legal requirement that the debtor produce financial records. It is both possible and desirable to ease many of these barriers. Bankruptcy relief facilitates the rehabilitation of debtors in financial distress, contributes to the economic well-being of the …
Considerations For Private Equity Firms When Utilizing Chapter 11 New Value Deals, Alexandra Wilde
Considerations For Private Equity Firms When Utilizing Chapter 11 New Value Deals, Alexandra Wilde
Michigan Business & Entrepreneurial Law Review
The new value exception to the Chapter 11 absolute priority rule provides a narrow avenue for equity holders to retain an equity interest in a reorganized company over the objections of senior creditors and interest holders. With the increasing number of Chapter 11 reorganization filings by private equity owned companies, private equity firms may be interested in exploring ways to retain their equity ownership in the debtor company. This Note explores the unique implications a private equity firm may encounter when attempting to utilize the new value exception as a last resort to maintain ownership in a debtor company. Part …
Assessing The Chrysler Bankruptcy, Mark J. Roe, David Skeel
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
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 …
Bankruptcy Fire Sales, Lynn M. Lopucki, Joseph W. Doherty
Bankruptcy Fire Sales, Lynn M. Lopucki, Joseph W. Doherty
Michigan Law Review
For more than two decades, scholars working from an economic perspective have criticized the bankruptcy reorganization process and sought to replace it with market mechanisms. In 2002, Professors Douglas G. Baird and Robert K. Rasmussen asserted in The End of Bankruptcy that improvements in the market for large public companies had rendered reorganization obsolete. Going concern value could be captured through sale. This Article reports the results of an empirical study comparing the recoveries in bankruptcy sales of large public companies in the period 2000 through 2004 with the recoveries in bankruptcy reorganizations during the same period. Controlling for company …
Contract As Statute, Stephen J. Choi, G. Mitu Gulati
Contract As Statute, Stephen J. Choi, G. Mitu Gulati
Michigan Law Review
The traditional model of contract interpretation focuses on the "meeting of the minds." Parties agree on how to structure their respective obligations and rights and then specify their agreement in a written document. Gaps and ambiguities are inevitable. But where contract language exists for the point in contention and a dispute arises as to the meaning of this language, courts attempt to divine what the parties intended. Among the justifications for deferring to the intent of the parties is the assumption that parties know what is best for themselves. Deference also arguably furthers autonomy values. Not all contracts and contract …
Can The Sauvegarde Reform Save French Bankruptcy Law?: A Comparative Look At Chapter 11 And French Bankruptcy Law From An Agency Cost Perspective, Robert Weber
Michigan Journal of International Law
This Note will attempt to explain the intersection of agency costs and bankruptcy law, looking first to general agency problems involved when firms are insolvent and moving next to discussions of how U.S. Chapter 11 and French bankruptcy laws attempt to address these problems. First, I will attempt to articulate the relationship between agency costs and (1) debtor control over the firm during Chapter 11 reorganizations and (2) deviations from the absolute priority rule in Chapter 11. Specifically, I will argue that creditors voluntarily accede to plans proposed by management that impair the same creditors' legal entitlements, and that this …
The Political Economy Of The Bankruptcy Reform Act Of 1978, Eric A. Posner
The Political Economy Of The Bankruptcy Reform Act Of 1978, Eric A. Posner
Michigan Law Review
These are the goals of this article. In particular, this article analyzes the legislative history of the Bankruptcy Reform Act of 19783 and related materials, in the hope of describing the influence of interest groups on the final statute. It has, of course, long been assumed that certain narrow provisions of the 1978 Act reflect the influence of interest groups - for example, the section that gives special protection to security and lease interests in aircraft. This article goes farther and argues that fundamental elements of the 1978 Act reflect political compromises among competing interest groups. In particular, I claim …
A New Approach To Transnational Insolvencies, Robert K. Rasmussen
A New Approach To Transnational Insolvencies, Robert K. Rasmussen
Michigan Journal of International Law
Part I of this article sets forth the general problems associated with transnational bankruptcies. Part II then shows that, from an efficiency standpoint, the optimal solution would be to allow firms to select, at the time of incorporation, which set of bankruptcy rules will govern in the event of financial distress. Part III examines the transnational bankruptcy problem under the assumption that each nation will continue to dictate the content of its bankruptcy laws. The accepted wisdom is that under this assumption, the best solution to transnational insolvencies is for all countries to adopt a rule whereby the home jurisdiction …
The Equal Access To Justice Act--Are The Bankruptcy Courts Less Equal Than Others?, Matthew J. Fischer
The Equal Access To Justice Act--Are The Bankruptcy Courts Less Equal Than Others?, Matthew J. Fischer
Michigan Law Review
This Note argues that the bankruptcy courts have authority under the BAJA to shift fees against the federal government. Part I discusses the relevant caselaw and examines the basis of the current controversy. Part II examines the statutory language, the legislative history, and the stated purposes of the BAJA and concludes that each of these aspects of the statute demonstrates a congressional intent to grant fee-shifting authority to the bankruptcy courts. Part III considers alternatives to finding bankruptcy court jurisdiction over BAJA disputes, rejecting each as inefficient and unnecessary. This Note concludes that courts should construe the BAJA consistently with …
The Outer Fringes Of Chapter 11: Nonconsenting Senior Lenders' Rights Under Subordination Agreements In Bankruptcy, David Kravitz
The Outer Fringes Of Chapter 11: Nonconsenting Senior Lenders' Rights Under Subordination Agreements In Bankruptcy, David Kravitz
Michigan Law Review
This Note focuses on the options a senior creditor in Frugal's position may have when a reorganization plan provides for payments in violation of a subordination agreement that the creditor wishes to enforce. Part I explains the different types of subordination agreements and discusses their treatment under pre-Code bankruptcy law and under the Bankruptcy Code. Because of the dearth of case law regarding nonconsenting senior lenders and subordination agreements, Part II considers a question in a related area of bankruptcy law where more authority exists: whether a reorganization plan may release a nonbankrupt guarantor from its obligations under the guaranty …
Strange Visions In A Strange World: A Reply To Professors Bradley And Rosenzweig, Lynn M. Lopucki
Strange Visions In A Strange World: A Reply To Professors Bradley And Rosenzweig, Lynn M. Lopucki
Michigan Law Review
Much about chapter 11 is in need of improvement. But, as is so often the case, the resonant themes are not the right ones. All three legs of Bradley and Rosenzweig's argument for repeal are seriously flawed. The heart of their empirical argument is their claim to have shown that financially stronger companies reorganizing under chapter 11 have been paying less to both their creditors and their shareholders than did weaker companies reorganizing under prior law. In Part I below, I present several more plausible explanations for the stock and bond price phenomena they observed. In all likelihood, their data …
Debt, Development, And Human Rights: Lessons From South Africa, Daniel D. Bradlow
Debt, Development, And Human Rights: Lessons From South Africa, Daniel D. Bradlow
Michigan Journal of International Law
This paper, through a case study of financial sanctions against South Africa, demonstrates that it is possible to design a development-oriented financial sanctions strategy against any country that violates the human rights of its citizens and in which government regulations, including exchange controls, result in foreign-owned financial assets being trapped in the target country. This strategy will both deprive the perpetrators of the human rights violations of new funds and will help redirect the blocked funds into activities that are designed to promote the political and socioeconomic development of the victims of the human rights abuses. The means for identifying …
The Development Of The Equal Treatment Principle In The International Debt Crisis, Carsten Thomas Ebenroth, Rüdiger Woggon
The Development Of The Equal Treatment Principle In The International Debt Crisis, Carsten Thomas Ebenroth, Rüdiger Woggon
Michigan Journal of International Law
Since the outbreak of the international debt crisis at the beginning of the 1980s, debtor countries have reached a series of agreements with private creditor banks, with the aim of reducing the financial strain on the debtor countries and enabling them to service their debts. Long-term extensions of maturities are a central aspect of many of these arrangements. Included in the restructurings are all the medium- and long-term claims of the creditor banks, often short-term trade credits and interbank lines, and, in individual cases such as the restructuring of the debts of Poland, Yugoslavia, Costa Rica, and some African States, …
Philosophy In Bankruptcy, David Gray Carlson
Philosophy In Bankruptcy, David Gray Carlson
Michigan Law Review
A Review of The Logic and Limits of Bankruptcy Law by Thomas H. Jackson
Mediation In Debtor/Creditor Relationships, Edward A. Morse
Mediation In Debtor/Creditor Relationships, Edward A. Morse
University of Michigan Journal of Law Reform
Two states that have substantial interests in agricultural debtor/creditor relationships have attempted to limit the social and economic costs of prematurely terminating the debtor/creditor relationship. Iowa and Minnesota have adopted a statutory requirement that the creditor offer to submit to mediation prior to taking any debt collection action against an agricultural borrower. This Note argues that requiring creditors to offer mediation as a statutory prerequisite to debt collection is an effective means of reducing the social and economic costs of the premature termination of a debtor/creditor relationship in business contexts. Part I examines the conceptual foundations of the mediation process …
Law, Legalism, And Community Before The American Revolution, Bruce H. Mann
Law, Legalism, And Community Before The American Revolution, Bruce H. Mann
Michigan Law Review
The connections between law and community are difficult to identify, let alone explain. It may be best to begin by seeing how law and the ways people used it changed, and then attempt to relate those changes to the surrounding economy and society. One must, of course, be wary of finding what one looks for. Nonetheless, as with objects against a dark background, it is sometimes easier to see things when they move than when they remain still. To illustrate the interactive nature of legal change and community, I will draw on examples from Connecticut before the Revolution - not …
Exemption Of Erisa Benefits Under Section 522(B)(2)(A) Of The Bankruptcy Code, Michigan Law Review
Exemption Of Erisa Benefits Under Section 522(B)(2)(A) Of The Bankruptcy Code, Michigan Law Review
Michigan Law Review
This Note argues that the two federal statutes are exempting statutes under section 522(b)(2)(A), and thus BRISA funds should be exempt in a bankruptcy action when the debtor uses the state exemption scheme. Part I argues that standard principles of statutory interpretation, as applied to the language of the bankruptcy statute, refute the possibility that Congress intended the list of statutes in the legislative history to be exclusive. Having established that statutes other than those listed may be included under section 522(b )(2)(A), Part II first refutes the argument that the absence of BRISA from the list of exempting statutes …
Avoiding Liens Under The New Bankruptcy Code: Construction And Application Of Section 522(F), Judy Toyer
Avoiding Liens Under The New Bankruptcy Code: Construction And Application Of Section 522(F), Judy Toyer
University of Michigan Journal of Law Reform
This Note argues that strict construction of section 522(f)(2) is most consistent with congressional intent. Part I discusses the congressional rationale behind lien avoidance. Part II examines present efforts to apply section 522(f)(2), and concludes that judicial interpretation to date has proved largely inadequate. Finally, Part III proposes new judicial guidelines and statutory amendments designed to standardize application of the lien avoidance provision in a manner consistent with the congressional intent behind the Reform Act.
Estates By The Entirety In Bankruptcy, Frank J. Spivak
Estates By The Entirety In Bankruptcy, Frank J. Spivak
University of Michigan Journal of Law Reform
This Note argues that the exemption for entirety property should be abolished. Part I examines the treatment of entirety property under the Code and illustrates the conflict between the entirety exemption and ·federal bankruptcy policy. Part II discusses procedural devices that creditors employ to subject entirety property to bankruptcy distribution.
Filing For Personal Bankruptcy: Adoption Of A "Bona Fide Effort" Test Under Chapter 13, Stephan M. Vidmar
Filing For Personal Bankruptcy: Adoption Of A "Bona Fide Effort" Test Under Chapter 13, Stephan M. Vidmar
University of Michigan Journal of Law Reform
Part I discusses the history and current application of the Chapter 13 wage earner relief provisions, focusing on the present "good faith" controversy. Part II analyzes the "bona fide effort" test and examines its current congressional status. Part III suggests that more specific statutory guidance is necessary in order to effectively apply the "bona fide effort" test and recommends specific guidelines for its use. The article concludes that by following such a set of standard guidelines when applying the "bona fide effort" test, bankruptcy courts would promote uniform treatment of debtors, enhance judicial economy, and facilitate appellate review of Chapter …
Consumer Warranty Claims Against Companies In Chapter 11 Reorganizations, Elizabeth Warner
Consumer Warranty Claims Against Companies In Chapter 11 Reorganizations, Elizabeth Warner
University of Michigan Journal of Law Reform
This article examines the rights of individuals who have purchased warranted goods from a business that subsequently undergoes reorganization under Chapter 11 of the Bankruptcy Reform Act of 1978. Part I establishes that warranty rights are claims in bankruptcy and outlines the procedure that must be followed by a creditor for distribution from the debtor's estate. Part II focuses on how warranty claims are treated in Chapter 11. Part III discusses ways to alleviate the warranty creditor's representational burden, particularly through the intervention and aid of public interest groups. This article concludes that . warranty creditors will receive favorable treatment …
Standards For Insecurity Acceleration Under Section 1-208 Of The Uniform Commercial Code: A Proposal For Reform, Darlene M. Nowak
Standards For Insecurity Acceleration Under Section 1-208 Of The Uniform Commercial Code: A Proposal For Reform, Darlene M. Nowak
University of Michigan Journal of Law Reform
This article examines in Part I how insecurity clauses function under the common law and the U.C.C .. Part II discusses the areas of controversy under section 1-208, the definition of good faith, the need for notice to the debtor, and the debtor's burden of proof. The article will evaluate the need for substantive reform in each area of controversy. A two-tier test of the creditor's insecurity is proposed wherein although the creditor has no responsibility to check the truth of his information, he may accelerate only if the information is true and is such as to make a reasonable …
Abandoning Bankruptcy Law's "Identity Of Interest" Exception, Michigan Law Review
Abandoning Bankruptcy Law's "Identity Of Interest" Exception, Michigan Law Review
Michigan Law Review
Section I of this Note discusses the goals and weaknesses of the identity of interest exception; Section II explains the advantages of consolidation and novation; and the final Section suggests a way to separate cases where novation is appropriate from those where consolidation is the preferred remedy.
An Empirical Analysis Of The Equal Credit Opportunity Act, James A. Burns Jr.
An Empirical Analysis Of The Equal Credit Opportunity Act, James A. Burns Jr.
University of Michigan Journal of Law Reform
This article will first examine the legislative history of the ECOA to discover (1) the impetus for its enactment; (2) the views of proponents and opponents of the legislation concerning the presence of credit discrimination, its proper cure, and the proposed provisions of the bills introduced to deal with the problem; and (3) the congressional intent as to the use of various credit-granting factors described by the Act. Regulation B will then be similarly examined to find out how the broad mandates of the ECOA have been made concrete for the use of creditors. Finally, the article will focus on …
The Automatic Stay In Bankruptcy, Frank R. Kennedy
The Automatic Stay In Bankruptcy, Frank R. Kennedy
University of Michigan Journal of Law Reform
The filing of a petition under the Bankruptcy Act constitutes an automatic stay of all litigation against the debtor and most acts and actions against the debtor's property. The stay is one of the most notable features of the Rules of Bankruptcy Procedure promulgated by the Supreme Court. The constitutional and statutory basis for the automatic stay has been challenged, and the propriety and the scope of the stay have been contested and ruled on, in many reported opinions. The need and justification for an automatic stay in bankruptcy and debtor relief cases have been widely acknowledged, and an automatic …
Legislative Restriction Of Creditor Powers And Remedies: A Case Study Of The Negotiation And Drafting Of The Wisconsin Consumer Act, Jeffrey Davis
Legislative Restriction Of Creditor Powers And Remedies: A Case Study Of The Negotiation And Drafting Of The Wisconsin Consumer Act, Jeffrey Davis
Michigan Law Review
This Article discusses the background, negotiation, and drafting of selected WCA restrictions on creditor powers and remedies and compares those provisions to the analogous restrictions proposed by other reform measures. In addition to the UCCC, the MCCA and the WCA, two other major works must be considered in any discussion of consumer-credit legislation. First is Working Redraft No. 4 of the UCCC (UCCC Redraft). This proposed revision, published in December 1972, represents a marked change in the UCCC. Many provisions favorable to the consumer have been added, and many of the parallel provisions on sales and loans have been consolidated. …