Open Access. Powered by Scholars. Published by Universities.®

Law Commons

Open Access. Powered by Scholars. Published by Universities.®

University of Pennsylvania Carey Law School

State and Local Government Law

Chapter 9

2016

Articles 1 - 1 of 1

Full-Text Articles in Law

Governance Reform And The Judicial Role In Municipal Bankruptcy, Clayton P. Gillette, David A. Skeel Jr. Jan 2016

Governance Reform And The Judicial Role In Municipal Bankruptcy, Clayton P. Gillette, David A. Skeel Jr.

Faculty Scholarship at Penn Law

Recent proceedings involving large municipalities such as Detroit, Stockton, and Vallejo illustrate both the utility and the limitations of using the Bankruptcy Code to adjust municipal debt. In this article, we contend that, to truly resolve the distress of a substantial city, municipal bankruptcy needs to do more than simply provide immediate debt relief. Debt adjustment alone does nothing to remedy the fragmented decision-making and incentives for expanding municipal budgets that underlie municipal distress. Unless bankruptcy also addresses governance dysfunction, the city may slide right back into financial crisis. Governance restructuring has long been an essential element of corporate bankruptcy ...