Law Commons^™

From Coase To Cooter: The Criticisms To Pigou’S Ideas, Enrico Baffi

enrico baffi

The aim of this paper is at discovering the most profound divergences between Coase and Pigou. Coase is well known for his theorem, but in his article ”The Problem of social Cost” he wants to point all the convincing criticisms to Pigou way of reasoning or, it is probably more correct to say, to Pigou’s oral tradition. I have found at least four criticisms. The last one, that states that it is impossible to have a mechanism of internalization of all social costs , is probably the least appealing but that one that has the strongest roots. I have also …

Improving Bankruptcy Sales By Raising The Bar: Imposing A Preliminary Injunction Standard On Objections To Section 363 Sales, Matthew Adam Bruckner

Matthew Adam Bruckner

In response to objections causing wasteful, unnecessary, and inappropriate delay in the bankruptcy sale context, this article concludes that bankruptcy courts should employ a preliminary injunction standard for evaluating objections to bankruptcy sales. Employing a strict, clear and uniform standard would decrease the likelihood that strategic objectors will succeed in delaying bankruptcy sales, but should not bias creditors with “legitimate” objections. By preventing inappropriate delay, courts will ensure that creditors receive an appropriate amount of procedural protection for their legitimate claims, while at the same time preventing parties-in-interest from engaging in rent-seeking behavior by making strategic objections to bankruptcy sales.

Pyres, Haircuts, And Cacs: Lessons From Greece’S Restructuring, Nicholas L. Georgakopoulos

Nicholas L Georgakopoulos

Abstract: The restructuring of Greece’s debt offers a clean case study of the dynamics of sovereign restructuring. This essay discusses the powerlessness of sovereign creditors, Greece’s predicament, and the resolution of its insolvency through (a) a two-step refinancing with bond accumulation and value injection and (b) collective action legislation and equivalent clauses. The analysis suggests that a sovereign insolvency regime should grant priority to post-insolvency creditors over pre-insolvency creditors, should allow voting by classes, and should be conditional on the debtor’s continued compliance with reform and supervision.

The Indentured Generation: Bankruptcy And Student Loan Debt, Daniel A. Austin

Daniel A. Austin

A generation of Americans has borrowed heavily for their education, and hundreds of thousands of them are deeply in debt. Some 37 million Americans owe a total of approximately $1 trillion dollars in student loans. They constitute an Indentured Generation as many of them will be burdened with student loan debt for much of their lives. With one of the worst job markets in decades, members of the Indentured Generation who are in particularly dire circumstances will turn to bankruptcy for a “fresh start.” But most student loan debtors will not get relief through bankruptcy. This is because the Bankruptcy …

The Indentured Generation: Bankruptcy And Student Loan Debt, Daniel A. Austin

Daniel A. Austin

A generation of Americans has borrowed heavily for their education, and hundreds of thousands of them are deeply in debt. Some 37 million Americans owe a total of approximately $1 trillion dollars in student loans. They constitute an Indentured Generation as many of them will be burdened with student loan debt for much of their lives. With one of the worst job markets in decades, members of the Indentured Generation who are in particularly dire circumstances will turn to bankruptcy for a “fresh start.” But most student loan debtors will not get relief through bankruptcy. This is because the Bankruptcy …

The Indentured Generation: Bankruptcy And Student Loan Debt, Daniel Austin

Daniel A. Austin

THE INDENTURED GENERATION:

BANKRUPTCY AND STUDENT LOAN DEBT

By Daniel A. Austin

Associate Professor, Northeastern University School of Law

A generation of Americans has borrowed heavily for their education, and hundreds of thousands of them are deeply in debt. Some 37 million Americans owe a total of approximately $1 trillion dollars in student loans. They constitute an Indentured Generation as many of them will be burdened with student loan debt for much of their lives. With one of the worst job markets in decades, members of the Indentured Generation who are in particularly dire circumstances will turn to bankruptcy for …

The Indentured Generation: Bankruptcy And Student Loan Debt, Daniel A. Austin

Daniel A. Austin

THE INDENTURED GENERATION:

BANKRUPTCY AND STUDENT LOAN DEBT

By Daniel A. Austin

Associate Professor, Northeastern University School of Law

A generation of Americans has borrowed heavily for their education, and hundreds of thousands of them are deeply in debt. Some 37 million Americans owe a total of approximately $1 trillion dollars in student loans. They constitute an Indentured Generation as many of them will be burdened with student loan debt for much of their lives. With one of the worst job markets in decades, members of the Indentured Generation who are in particularly dire circumstances will turn to bankruptcy for …

The Indentured Generation: Bankruptcy And Student Loan Debt, Daniel A. Austin

Daniel A. Austin

A generation of Americans has borrowed heavily for their education, and hundreds of thousands of them are deeply in debt. Some 37 million Americans owe a total of approximately $1 trillion dollars in student loans. They constitute an Indentured Generation as many of them will be burdened with student loan debt for much of their lives. With one of the worst job markets in decades, members of the Indentured Generation who are in particularly dire circumstances will turn to bankruptcy for a “fresh start.” But most student loan debtors will not get relief through bankruptcy. This is because the Bankruptcy …

Epic Fail: An Institutional Analysis Of Financial Distress, Jonathan C. Lipson

Jonathan C. Lipson

This paper presents an institutional analysis of financial distress. “Institutional analysis” compares the effectiveness of large-scale processes, such as markets, courts, and governments, at solving social problems. Although financial distress is one of our most acute problems, there has been virtually no effort to analyze it from an institutional perspective. This paper begins to fill that gap.

Institutional analysis shows that, contrary to conventional wisdom, financial distress is not a problem that courts, such as bankruptcy courts, usually solve by themselves. Instead, it is increasingly a problem that political organs (whether elected or regulatory) both create and purport to resolve. …

Risk Based Student Loans, Michael Simkovic

Michael N Simkovic

Credit markets serve a vital function in capitalist economies: evaluating the riskiness of a range of possible investments and channeling resources toward those investments that investors believe are most likely to prove successful. This process is known as the “risk-based pricing” of credit. Ideally, risk-based pricing should lead to lower cost of capital for lower risk investment choices with larger rewards, and therefore more investment in such promising activities. Conversely, risk-based pricing should lead to higher costs of capital, and therefore less investment, in high-risk activities with relatively low rewards. If creditors are well informed and analytic, and borrowers respond …

Revisiting Clear Channel – Acquiring Real Property In A Section 363 Bankruptcy Sale “Free And Clear” Of Liens, Joseph Bolnick

joseph bolnick

This article addresses the impact that the Clear Channel decision has had on 363 sales. In 2008, the bankruptcy bar anticipated that Clear Channel was likely to inhibit buyers from participating in 363 sales, potentially crippling the usefulness of this important preconfirmation procedure. Now, four years later, it is timely to assess the case's impact on 363 sales.

Bankruptcy And The Myth Of "Uniform Laws", Daniel A. Austin

Daniel A. Austin

The Bankruptcy Clause of the Constitution empowers Congress to enact “uniform Laws on the subject of bankruptcies.” Common definitions of the word uniform include “always the same” and “not variable.” Yet the rights and remedies of debtors and creditors in a bankruptcy case vary significantly depending upon the state and federal jurisdiction in which the case is filed. Rather than a single uniform law of bankruptcy, the U.S. has multiple bankruptcy laws and regimes based upon geography.

The cause of bankruptcy nonuniformity lies in the structure of our bankruptcy system. Many sections of the Bankruptcy Code incorporate state law, which …

How Tax Haven Entities Falter In U.S. Bankruptcy Courts, Joshua A. Nemser

Joshua A Nemser

This paper discusses the paradox facing the thousands of hedge funds incorporated in offshore tax havens such as Bermuda and the Cayman Islands. When placed in insolvency proceedings in the jurisdiction of their incorporation, several of these funds have been denied access to United States bankruptcy courts based on the principle of nonrecognition. Finding that the activities and assets of these funds are primarily located in the United States, such courts have refused to acknowledge the foreign proceedings. Without recognition, United States courts grant practically no assistance to the foreign proceeding. While those same courts invite the liquidators of these …

The Myth Of Cross-Border Cooperation: Mutual Assistance For The Collection Of Tax Claims In Cross-Border Insolvencies, Mathews Vattamala

Mathews Vattamala

“No country is an island to itself.” Cross-border tax cooperation and compliance are crucial to the health of the United States economy and the protection of its tax base. Yet, foreign courts administering cross-border insolvencies may deny a U.S. tax claim, even when such claims are treated as secured claims under local law. In a similar vein, a U.S. bankruptcy court recently refused to recognize the tax claim of a foreign government in reliance of the anachronistic common law doctrine, known as the “revenue rule.” To ensure other governments extend the U.S. the necessary cooperation it will need to collect …

Pyres, Haircuts, And Cacs: Lessons From Greco-Multilateralism For Creditors, Nicholas L. Georgakopoulos

Nicholas L Georgakopoulos

The restructuring of Greece’s debt offers a clean case study of the dynamics of sovereign restructuring. This essay discusses the powerlessness of sovereign creditors, Greece’s predicament, and its resolution through (a) a two-step refinancing with bond accumulation and value injection and (b) collective action legislation and equivalent clauses. The experience suggests that a sovereign insolvency regime should grant priority to post-insolvency creditors over pre-insolvency creditors, should allow voting by classes, and should be conditional on the debtor’s continued compliance with reform and supervision.

Indiana State Police Pension Trust V. Chrysler: A Missed Opportunity To Improve Collateral Valuation Doctrine, Jason A. Pan

Jason A Pan

Section 506(a)(1) of the Chapter 11 bankruptcy code addresses how to value collateral. This issue arose in Indiana State Police Pension Trust v. Chrysler, but unfortunately the Supreme Court declined to hear the case. As a result the current doctrine on whether to value collateral according to a liquidation versus a going concern standard is Assocs. Commercial Corp. v. Rash, which held that collateral should be valued according to its proposed use. The Rash doctrine, that collateral is to be valued using a going concern standard when proposed to be used in a going concern context, creates opportunity for economic …

Debtor’S Prison In The Neoliberal State: “Debtfare” And The Cultural Logics Of The Bankruptcy Abuse Prevention And Consumer Protection Act Of 2005, Linda E. Coco

Linda E. Coco

The enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) of 2005, amending the Bankruptcy Reform Act of 1978, marks a transformation in bankruptcy law and policy that is representative of larger shifts in dominant economic and political models from “embedded liberalism” to free market “neoliberalism.” BAPCPA’s provisions are part of the new practices of the emergent neoliberal state as they relate to the American middle class segment of the population. In disciplining the middle class, BAPCPA shifts the risk and the responsibility of the lending relationship onto consumer debtors. BAPCPA does this by keeping financially distressed individuals …

Debtor’S Prison In The Neoliberal State: “Debtfare” And The Cultural Logics Of The Bankruptcy Abuse Prevention And Consumer Protection Act Of 2005, Linda E. Coco

Linda E. Coco

The enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) of 2005, amending the Bankruptcy Reform Act of 1978, marks a transformation in bankruptcy law and policy that is representative of larger shifts in dominant economic and political models from “embedded liberalism” to free market “neoliberalism.” BAPCPA’s provisions are part of the new practices of the emergent neoliberal state as they relate to the American middle class segment of the population. In disciplining the middle class, BAPCPA shifts the risk and the responsibility of the lending relationship onto consumer debtors. BAPCPA does this by keeping financially distressed individuals …

Protective Orders In The Bankruptcy Court: The Congressional Mandate Of Bankruptcy Code Section 107 And Its Constitutional Implications, Michelle M. Harner, William T. Bodoh

Michelle M. Harner

No abstract provided.

The Denial Of Future Tort Claims In In Re Piper Aircraft: Will The Court's Quick-Fix Solution Keep The Debtor Flying High Or Bring It Crashing Down?, Michelle M. Harner

Michelle M. Harner

No abstract provided.

A Chapter 11 Debtor's Life After Oct. 17: Not So Bad If You Effectively Plan, Michelle M. Harner, Carl E. Black

Michelle M. Harner

No abstract provided.

Sublicensing From A Distressed Company: Are You Placing Your Future In The Debtor's Hands?, Michelle M. Harner, David A. Beck

Michelle M. Harner

No abstract provided.

The Fiduciary Duties Of Directors And Officers In Insolvent Corporations: A Uniform International Standard?, William H. Hudson

William H Hudson

This Article explores the complicated field of fiduciary duties governing corporate directors and officers in companies facing or dealing with insolvency. It provides both a macro and micro level investigation into the vast differences in corporate fiduciary duties across jurisdictions. This Article provides the results of a broad and unique survey conducted across the globe to gain an accurate perspective regarding the inconsistencies facing corporate directors and officers dealing with new or emerging fiduciary duties. The findings of this survey will be presented to the International Insolvency Institute at its annual meeting in Paris, France on June 21, 2012. This …

Incorporating Social Justice Concerns Into The New Law And Development Movement: The Importance Of Insolvency Law, Julia M. Davis Ms.

Julia M Davis Ms.

This paper focuses on insolvency law as an underutilized area for incorporating social justice concerns into legal reform projects in developing countries. Insolvency is an area of law that already plays a large role in legal development projects and is especially suited for incorporating social justice concerns because of its ability to redistribute wealth and safeguard vulnerable interests. In arguing that insolvency law should be better exploited by social justice advocates this paper briefly reviews the history and literature surrounding the “Legal Development Movement” (LDM) and discusses the responsibilities of development agencies to incorporate social justice concerns into economically-focused legal …

As Greece Goes, So Goes The E.U.: Defending Europe With A Sovereign Debt Restructuring Framework, Elizabeth H. Dahill

Elizabeth H Dahill

This Article discusses the current sovereign debt crisis in Europe and proposes that European policymakers adopt a European Debt Restructuring Framework [EDRF] modeled after the IMF’s Sovereign Debt Restructuring Mechanism [SDRM], sovereign bond contracts’ Collective Action Clauses [CAC] and the U.S Bankruptcy Code’s Chapter 9.

Chapter 11 Triage: Diagnosing A Debtor's Prospects For Success, Anne Lawton

Anne Lawton

In 2005, Congress enacted a number of provisions aimed at improving success rates for Chapter 11 small business debtors. The available empirical data, albeit limited in scope, showed startlingly low rates of plan confirmation. Conventional wisdom attributed the plan confirmation problem to the high failure rate of the Chapter 11 small business debtor. This Article presents the results of a large empirical study of Chapter 11 cases filed in 2004, the year before the small business amendments. The study examines the following questions. First, are confirmation rates in Chapter 11 low, and how do small debtors fare in terms of …

Chapter 11 Triage: Diagnosing A Debtor's Prospects For Success, Anne Lawton

Anne Lawton

Chapter 11 Triage: Diagnosing A Debtor's Prospects for Success by Anne Lawton In 2005, Congress enacted a number of provisions aimed at improving success rates for Chapter 11 small business debtors. The available empirical data, albeit limited in scope, showed startlingly low rates of plan confirmation. Conventional wisdom attributed the plan confirmation problem to the high failure rate of the Chapter 11 small business debtor. This Article presents the results of a large empirical study of Chapter 11 cases filed in 2004, the year before the small business amendments. The study examines the following questions. First, are confirmation rates in …

Chapter 11 Triage: Diagnosing A Debtor's Prospects For Success, Anne Lawton

Anne Lawton

In 2005, Congress enacted a number of provisions aimed at improving success rates for Chapter 11 small business debtors. The available empirical data, albeit limited in scope, showed startlingly low rates of plan confirmation. Conventional wisdom attributed the plan confirmation problem to the high failure rate of the Chapter 11 small business debtor. This Article presents the results of a large empirical study of Chapter 11 cases filed in 2004, the year before the small business amendments. The study examines the following questions. First, are confirmation rates in Chapter 11 low, and how do small debtors fare in terms of …

Non-Recourse Mortages – A Fresh Start, Ron Harris, Asher Meir

Ron Harris

In about a quarter of US states, all residential mortgages are essentially non-recourse, meaning that in case of default, the lender can only repossess the house but cannot collect on the private assets and future income of the borrower. This American innovation is now beginning to attract extensive interest abroad, but ironically in the US itself is getting a bad name. The law has been blamed for exacerbating the financial crisis, while stricken homeowners who take advantage of it have been scolded by lenders and even by the Secretary of the Treasury. We propose a fresh and more balanced look …

Competition And Crisis In Mortgage Securitization, Michael N. Simkovic

Michael N Simkovic

U.S. policymakers often treat market competition as a panacea. However, in the case of mortgage securitization, policymakers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed. Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis. This article provides original evidence that when competition was less intense and securitizers had more market power, securitizers acted to monitor mortgage originators and to maintain …